"Taking tough decisions and strong measures in the coming one or two years are needed to bring financial discipline which will restore and boost the country's self-confidence", he said addressing BJP workers.
This is the first occasion in less than three weeks since taking over reins of power that Modi has made sharply critical comments on the previous Manmohan Singh government's performance.
"I have taken over the reins of the country in circumstances when there is nothing left behind by the previous government. They left everything empty. The country's financial health has hit the bottom," Modi said.
However, in the short run, such measures may not go down well with everybody, he said.
"I am well aware that my steps may dent the immense love that the country has given to me. But when my countrymen would realise that these steps would result in getting the financial health back, then I will regain that love," said the prime minister.
On the other hand, if these tough measures were not taken, the financial situation would not improve, he said, adding "we need to take action wherever required".
"We won't be helping the country by praising Modi and praising BJP. There is no guarantee that just singing praise of Modi would improve the situation. We need to take harsh measures to improve the financial situation," he said.
Shortly later, Modi tweeted that "time has come to take tough decisions in the interest of the nation. Whatever decisions we take will be solely guided by national interest".
The prime minister said it was a misconception that people in government are not willing to work for the country.
"In a government set-up, most officials would like to do something for the country. They are ready to work. This is what I can say from my experience as the prime minister in the last fifteen days," Modi said.
Referring to this year's Lok Sabha elections, Modi said "they were not elections of arithmetic. They were elections of hopes and aspirations. And we have seen the results. For the first time since independence, we saw a non-Congress government coming to power with full majority without coalition.
"The people have given a clear signal to the political parties and all parties should understand these signals. The electorate doesn't agree with the old style of politics which was based on caste, class," Modi said.
"The major reason for these results was the country's youth voters who have transcended the boundaries and who have started working for the country's betterment, for freedom from corruption and speedier development," the prime minister said, adding people had entrusted him with a big responsibility and he would fulfil their aspirations.
"Time has come to take tough decisions in the interest of the nation. Whatever decisions we take, will be solely guided by national interest," Modi said.
He expressed the confidence that the stringent measures for prudent financial discipline he plans to take would not be for his own or his party's interest but for the larger interest of the nation.
He thanked lakhs of party workers who had contributed to the victory of the party in Goa and asked them to create an organisation where every person feels there is place for them.
"We should create an organisation where every person feels -- yes there is a place for me here. That will be our success," he said.
Modi said that a year ago, he had chosen Goa to lead the campaign for 2014 general elections and after becoming the prime minister, his first visit outside Delhi is to Goa.
The prime minister said this election has proved that people have defeated the politics of casteism, communalism, nepotism and dynasty and decided that government should provide security, prosperity, eliminate corruption and meet their aspirations and solve their problems.
"Now, it is our duty to fulfil their expectations," he said, assuring them that "there is a government in Delhi that they will be very proud of!."
He said his government would remain connected to the people, even in power, and work to empower people for the developmental process and has begun its work well.
He said that for ten years, people of the country have not witnessed a working government in Delhi and his government will work with clear conscience, clear policy and strong leadership to provide good governance.
Goa Chief Minister Manohar Parrikar, Minister of State for Defence Rao Inderjeet Singh and state BJP leaders were present at the meeting.
Modi still in campaign mode, can't believe he is PM: Cong
PM warns of tough economic measures
Is the RSS already at work in the government?
Goa MLAs World Cup party pooped, to pay for trip
Modi's election expenditure in Vadodara stood at Rs 50 lakh