Prime Minister Narendra Modi

Prime Minister Narendra Modi's first two big decisions after taking over on Monday has come in for close scrutiny. Mr Modi's initiative to invite SAARC (South Asian Association of Regional Cooperation) leaders to his swearing-in ceremony has not only been praised by foreign affairs analysts, but also by market analysts, who believe that "the action would allay investor concerns that Mr Modi would take an undue hawkish stance against the neighboring countries".

"In our view, it is this sort of out-of-the-box thinking that India needs at this stage," Bank of America Merrill Lynch analyst Jyotivardhan Jaipuria and Anand Kumar said.

Mr Modi's other big decision - pertaining to his cabinet - is being monitored closely. Barclays' analysts Siddhartha Sanyal and Rahul Bajoria say Mr Modi has enjoyed wide latitude in selecting his cabinet, which boosts expectations of strong, decisive and swift action by the new government.

While the jury is still out on the composition of Mr Modi's team, the initial feedback has been mixed.

In general, analysts are positive about the following,

1) Mr Modi's mantra of "minimum government and maximum governance" has gone down well with markets. Several smaller ministries have been merged to create a larger ministry with the aim of ensuring better coordination and efficiency. Finance & corporate affairs; coal, power & renewable energy ministries; highways & shipping ministries; mining & steel ministries have been clubbed as of now. According to Bank of America, clubbing of ministries would result in more cohesive decision making and reduce inter-ministerial conflict.

2) The downsizing of the government is a positive. Mr Modi has 45 ministers as compared to 71 in the UPA government under Dr Manmohan Singh. A lean cabinet will also mean greater accountability, Nomura added. It's important to mention that another ministry expansion is on the cards.

3) Markets seem to be comfortable with Arun Jaitley as the new finance minister. According to Nomura, Mr Jaitley is well versed in economic issues and is seen as reformist and market friendly. Mr Jaitley is expected to bring more cohesion in policy and is likely to focus on "easy wins" to restore confidence in the economy, Barclays says. Morgan Stanley's Ridham Desai says Mr Jaitley has been in government in various roles for nearly 25 years and that should go well with markets.

4) Mr Modi's government is likely to communicate far more effectively with the markets and the public in general, which should ensure greater transparency and better dissemination of information, Nomura says.

5) Women make up 25 per cent of Mr Modi's cabinet, a move towards greater women empowerment. Unlike in the past, women ministers have got high-profile ministries such as foreign affairs and HRD.

And concerned about these,

6) Absence of technocrats: There was speculation that technocrats and experts such as Arun Shourie and E Sreedharan will be appointed as ministers in the new government. That hasn't happened yet, though they may be inducted in advisory roles later.

7) Some more consolidation in ministries would have been better. For instance, contrary to expectations civil aviation continues to be a separate ministry and has not been included in one mega-transport ministry. According to Credit Suisse, no ministries were merged even as some ministers were given more than one portfolio.



8) There has been criticism that some ministers have got too much on their plates. For instance, Mr Jaitley has been entrusted with heavyweight portfolios such as finance and defence, which may not be a good thing for long. However, Mr Jaitley has clarified that he expects a full-time defence minister to be named in a "couple of weeks."

9) Nearly 30 per cent of ministers in Mr Modi's cabinet reportedly have criminal charges pending against them. Former Idea Cellular CEO Sanjeev Aga told NDTV that he is disappointed by the new cabinet. This cabinet of 45 people falls short on good governance and clean governance, he said.

10) Mr Modi's team has been criticized by some for lacking young faces. It would have been better if the cabinet's average age would have been around 50 years as against 60 years currently, Mr Aga noted.