Inflation, infrastructure and investment on govt's reform agenda

Govt plans to reform coal sector, defence industry

The new government will pursue a broad economic reform agenda focused on job creation through public and private investment that also makes containing inflation its top priority, President Pranab Mukherjee told parliament on Monday.

The president said the government would introduce a general sales tax, encourage foreign investment and speed up approvals for major business projects while tackling bottlenecks that make India's food inflation the highest among major economies.

The anti-inflationary message will be welcomed by RBI governor Raghuram Rajan who has made India's growth-stifling high interest rates contingent on containing consumer prices.

Mukherjee said returning to a path of high economic growth after several volatile years was paramount.

The economy grew by 4.7% in 2013-14, marking the second straight year of sub-5% growth and the longest such slowdown in more than a quarter of a century.

The government will "urgently pursue" reforms to the state-run coal sector and to the defence industry to attract private investment, the president said, while speeding up project clearances to promote labour intensive manufacturing industries.

Modi's government also promised to ensure that every family has a good home with uninterrupted supplies of power by 2022. It will urgently seek to revamp India's creaking railway system, with a focus on high speed trains, as well as road and airport building.