Indian Prime Minister Narendra Modi will make curtailing food inflation his top priority, President Pranab Mukherjee told lawmakers today, outlining the two-week-old government’s policies.
Modi’s administration will improve the supply of agricultural products and prevent hoarding and illegal sales, Mukherjee said in a televised address. The government is also preparing contingency plans in case a poor monsoon affects food production, he added.
Modi took power on May 26 after his Bharatiya Janata Party won the first parliamentary majority in 30 years on a campaign that pledged growth and development in the world’s most populous democracy. He faces the challenge of boosting expansion from near a decade low while the central bank keeps interest rates elevated to combat Asia’s fastest inflation.
“We will work together to usher our economy to a high growth path, rein in inflation, reignite the investment cycle, accelerate job creation and restore the confidence of domestic as well as the international community in our economy,” Mukherjee said.
Reserve Bank of India Governor Raghuram Rajan left the key repurchase rate unchanged at an 18-month high of 8 percent last week and signaled he would ease policy if inflation slows faster than anticipated. He aims to lower consumer-price gains to 8 percent in January 2015 and 6 percent a year later. The rate was 8.59 percent in April.
“The challenge remains on how to remove the bottlenecks that really affect the supply chain,” said N.R. Bhanumurthy, an economist at the National Institute of Public Finance and Policy in New Delhi. “Still, all these comprise a wish list and the government’s real competence will be judged in the budget” due to be unveiled by Finance Minister Arun Jaitley next month.
The government will also simplify tax and investment rules by working toward a consensus to implement the goods and services levy and introduce single-window clearances for industrial projects, Mukherjee said. High speed rail networks will be set up, low cost airports will be built to connect smaller towns and foreign direct investment will be encouraged in defense to aid technology transfer.
Modi’s Hindu nationalist BJP will engage and boost ties with India’s neighbors, Russia, Japan, the U.S. and E.U., even as security will be managed by augmenting the armed forces with manpower and modern weapons. The nation faces cross-border insurgencies and territorial disputes.
“A policy of zero tolerance towards terrorism, extremism, riots and crime will be pursued,” Mukherjee said. “A national plan will be chalked out in consultation with the state governments to effectively curb incidents of communal violence and the challenges posed by left wing extremism.”
While the majority of India’s 1.2 billion citizens are Hindus, the nation has a secular constitution and is home to the world’s third-largest Muslim population. The fatal gang rape of a woman in Delhi in 2012 and the rape and murder of two girls last month also led to protests and demands that the government do more to tighten and enforce laws.
India’s gross domestic product rose 4.7 percent in the year ended March 31, near the previous period’s 4.5 percent that was the slowest since 2003. While slowing expansion hampers job creation, higher prices erode the purchasing power of more than 800 million Indians who live on less than $2 a day.
“Poverty has no religion, hunger has no creed, and despair has no geography,” Mukherjee said in today’s speech. “The greatest challenge before us is to end the curse of poverty in India.”