Indian President says reducing inflation is Modi’s primary task

COMBATING India’s elevated inflation will be the priority of the incoming government under Prime Minister Narendra Modi, according to a statement of its principles by the country’s President yesterday.

“We will work together to usher our economy into a high growth path, rein in inflation, reignite the investment cycle, accelerate job creation and restore the confidence of the domestic as well as international community,” said President Pranab Mukherjee.

Mukherjee confirmed promises to build 100 cities, rapidly modernise urban infrastructure and rationalise the labyrinthine tax system.

Investors are hoping for a more business-friendly environment from Modi, who has spoken about the need to enact supply-side reforms. However, there are signals that pressure on agricultural prices is easing.

“Food inflation has already reversed in May and is showing signs of collapsing in June, at both the retail and wholesale levels, due to the bumper rabi harvest,” said researchers from Bank of America Merrill Lynch.

Sources also suggested to Reuters yesterday that the government will lift a cap on foreign ownership of government debt.