Economy in focus as Modi starts second term without key aide Arun Jaitley

 Prime Minister Narendra Modi will take his oath of office on Thursday along with his ministers, though he suffered a setback at the start of his second term when key aide and Finance Minister Arun Jaitley opted out of the next government.

The swearing-in ceremony at the forecourt of the colonial-era presidential palace will be attended by thousands of guests including Bollywood stars and leaders of neighbours including Bangladesh and Sri Lanka.

Modi won a massive mandate in the general election that ended this month after focusing his campaign on national security, as tension with old rival Pakistan shot up over a deadly militant attack on security forces in the disputed region of Kashmir.

 

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 India's unity and integrity. National security is our priority."

Many ministers who are also senior members of the ruling alliance are expected to keep their place in the government. But changes in their departments are likely, especially after Jaitley wrote to Modi on Wednesday asking to be kept out due to health reasons.

Modi and the chief of his Hindu nationalist Bharatiya Janata Party (BJP), Amit Shah, could also promote many fresh faces to reward good electoral performance, mainly in the east of the country where they have traditionally been weak.

Shah himself is tipped to take up a role in the government, though some political analysts say he could stay on as BJP president to steer the party towards a majority in the upper house of parliament after dominating the lower house.

Nearly 8,000 people, including leaders of the decimated opposition bloc, are expected to attend the ceremony that will fete the incredible rise of 68-year-old Modi, the son of a tea seller.

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

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

Modi pushed through important reforms such as a unified goods and services tax and a bankruptcy law in his first five years in power, but faced flak for failing to create enough jobs for millions of people seeking employment, rising farm distress and lacklustre economic growth.

India's main opposition Congress party, meanwhile, is fighting to stay relevant after being overwhelmed in two straight general elections.

Its president, Rahul Gandhi, has offered to resign and on Thursday, the party said it would not send its spokespeople on television debates for a month as it analyses its latest defeat.