Economy in focus as PM Modi begins his second term

By Krishna N. Das

NEW DELHI (Reuters) - Indian Prime Minister Narendra Modi will take his oath of office on Thursday along with his ministers, including for the first time the powerful chief of his ruling Hindu nationalist party that just won a landslide victory in a general election.

Amit Shah, president of Modi's Bharatiya Janata Party (BJP), will join the new government as a minister, the party's leader in the western state of Gujarat, Jitu Vaghani, said on Twitter.

He did not say which ministry Shah would be in charge of but the chief architect of the BJP's two consecutive general election victories is tipped to replace Arun Jaitley as finance minister, media reported.

Shah was not available for comment.

Jaitley, a lawyer-turned-politician with deep experience of navigating India's political ecosystem, wrote to Modi on Wednesday asking to be kept out of government for health reasons.

Many other ministers who are also senior members of the ruling coalition are expected to retain their cabinet jobs.

But Modi could also promote fresh faces to reward a good performance in the seven-phase election in April and May.

The swearing-in of Modi, 68, the son of a tea seller, will take place on the forecourt of the colonial-era presidential palace with some 8,000 guests, including Bollywood stars and leaders of neighbours such as Bangladesh and Sri Lanka.

Modi focused his election campaign on national security, after tension with old rival Pakistan surged in February over a deadly bomb attack on security forces in the disputed region of Kashmir, which was claimed by Pakistan-based militants.

The leader of Pakistan was not invited to the inauguration.

“India is proud of all those brave men and women martyred in the line of duty,” Modi said after visiting a war memorial near parliament on Thursday.

“Our government will leave no stone unturned to safeguard Indias unity and integrity. National security is our priority.”

The BJP controls 303 of the 545 seats in the lower house of parliament, paving the way for the possibility Modi could attempt controversial land and labour reforms amid concern that Asia's third largest economy is faltering.

This week, two major industrial bodies called on the new government to take steps to bolster the economy, which grew 6.6% in the three months to December - the slowest in five quarters.

Modi pushed through reforms such as a goods and services tax and a bankruptcy law in his first five-year term, but faced criticism for failing to create enough jobs for people entering the job market, weak farm prices and tepid growth.

India's main opposition Congress party is trying to pick up the pieces after its second straight general election defeat.

Its president, Rahul Gandhi, has offered to resign. The party said on Thursday it would not let representatives take part in television debates for a month as it analyses its defeat.