"The challenges are very obvious. We have to restore back the pace of growth, contain inflation, and obviously concentrate on fiscal consolidation itself," Mr Jaitley said.
Arun Jaitley, one of Mr Modi's closest associates, has also been handed additional charge of another big portfolio - Defence. On Tuesday morning he sought to make clear that the Defence Ministry charge is temporary. (Read Arun Jaitley: From Corporate Lawyer to Finance Minister)
"For a transient phase, I will be looking after Ministry of Defence also, but that's only an additional charge till there's an expansion in cabinet itself," he said.
Mr Jaitley, 61, will have more than his hands full with the Finance Ministry. In less than two months, he has to present a Budget that will be determined by several sobering facts.
The Modi government inherits an economy that is growing at the slowest pace in a decade. It is also saddled with high fiscal deficit, which has led to threats of a sovereign downgrade by ratings agencies. And the country faces the worry of a poor monsoon.
To meet a deficit target of 4.6 per cent of gross domestic product in 2013-14, the outgoing government cut spending by nearly Rs 1 lakh crore and rolled over even larger subsidy costs into the new year.
That austerity could prove hard to sustain. Spending accounts for 11 per cent of GDP, offering a critical growth lever. Continuing to defer payments to state-run companies that would compensate them for selling fuel, fertiliser and food below market prices can create havoc with their finances and make them rely on borrowing to fund operations.
The Reserve Bank of India wants to bring down consumer price inflation to around 6 per cent from the current 8.6 per cent by January 2016, which would probably mean more interest rate increases. It has raised rates three times since September.
RBI Governor Raghuram Rajan was one of the first key officials to meet Mr Jaitley today. (Read the story here)
Mr Jaitley is one of India's top corporate lawyers and has served as a commerce minister in Atal Bihari Vajpayee's BJP-led government that preceded the 10 years of Congress rule.
(With inputs from Reuters)