New Delhi, Ashima Goyal, member of the RBI's monetary policy committee, has said that the NDA government led by Prime Minister Narendra Modi in its third term should focus on increasing agricultural productivity and improving the supply chain to reduce the food price volatility.
Goyal further said that the prospects for strong growth and falling inflation continue with the return of a stable conservative government that will enable coordination of monetary and fiscal policy in the best interest of the country.
"As the economy is doing well, continuity is very important. Viable reforms are required that improve the supply side and leverage technology and youth advantages," she said.
Goyal emphasized that there is a need to expand capacity in health, education, environment, courts, policing and also infrastructure.
"Increased agricultural productivity and strong supply chains are necessary to reduce volatility in food prices," she said, adding that many of them require good coordination with states.
Replying to a question on retail inflation, Goyal said the policy has achieved low inflation and strong growth recovery in recent years, partly because it did not allow real interest rates to deviate from equilibrium levels.
"In my view, therefore, nominal rates must fall with inflation to prevent real rates from rising.
"The majority view (RBI MPC members) wants to wait and watch for longer to ensure inflation falls sustainably," she said.
Retail inflation was 4.75 percent in May.
The RBI, which is mandated to ensure that inflation remains at 4 per cent (with a margin of 2 per cent on either side), mainly takes into account the CPI while making its monetary policy.
Regarding the correlation between coalition governments and economic reforms, she said that political stability allows a government to take a long-term view and therefore gives better results over time.
"But a stable coalition can be equally effective," he said, adding that the recent elections and the smooth formation of a well-functioning coalition point to the deep roots of Indian democracy.
He pointed out that the two chief ministers (N Chandrababu Naidu and Nitish Kumar) of the current NDA coalition are committed to development, which aligns well with the main objective of the NDA government as Naidu's TDP won the elections based on a development plan that contrasted with the populism of the opposition.
"The association will also enhance the secular credentials of the NDA government," he argued.
With the support of N Chandrababu Naidu's TDP and Nitish Kumar's JD(U), which won 16 and 12 seats in Andhra Pradesh and Bihar respectively, and other alliance partners, the NDA has crossed the halfway mark to form the government at the Center.
Goyal further said that the prospects for strong growth and falling inflation continue with the return of a stable conservative government that will enable coordination of monetary and fiscal policy in the best interest of the country.
"As the economy is doing well, continuity is very important. Viable reforms are required that improve the supply side and leverage technology and youth advantages," she said.
Goyal emphasized that there is a need to expand capacity in health, education, environment, courts, policing and also infrastructure.
"Increased agricultural productivity and strong supply chains are necessary to reduce volatility in food prices," she said, adding that many of them require good coordination with states.
Replying to a question on retail inflation, Goyal said the policy has achieved low inflation and strong growth recovery in recent years, partly because it did not allow real interest rates to deviate from equilibrium levels.
"In my view, therefore, nominal rates must fall with inflation to prevent real rates from rising.
"The majority view (RBI MPC members) wants to wait and watch for longer to ensure inflation falls sustainably," she said.
Retail inflation was 4.75 percent in May.
The RBI, which is mandated to ensure that inflation remains at 4 per cent (with a margin of 2 per cent on either side), mainly takes into account the CPI while making its monetary policy.
Regarding the correlation between coalition governments and economic reforms, she said that political stability allows a government to take a long-term view and therefore gives better results over time.
"But a stable coalition can be equally effective," he said, adding that the recent elections and the smooth formation of a well-functioning coalition point to the deep roots of Indian democracy.
He pointed out that the two chief ministers (N Chandrababu Naidu and Nitish Kumar) of the current NDA coalition are committed to development, which aligns well with the main objective of the NDA government as Naidu's TDP won the elections based on a development plan that contrasted with the populism of the opposition.
"The association will also enhance the secular credentials of the NDA government," he argued.
With the support of N Chandrababu Naidu's TDP and Nitish Kumar's JD(U), which won 16 and 12 seats in Andhra Pradesh and Bihar respectively, and other alliance partners, the NDA has crossed the halfway mark to form the government at the Center.
