New Delhi: During its third term, the Modi government should focus on raising agricultural productivity and improving supply chains to reduce volatility in food prices. RBI monetary policy committee member Ashima Goyal said that with the return of a stable government, there is scope for strong growth and declining inflation.

He said, since the economy is doing well, continuity is very important. Goyal stressed that there is a need to expand capacity in health, education, environment, courts, police system as well as infrastructure. He said, increased agricultural productivity and strong supply chain are necessary to reduce fluctuations in food prices.

He said many of these require good coordination with the states. Responding to a question on retail inflation, Goyal said the Monetary Policy Committee has managed to maintain both low inflation and strong growth in the last few years because it has not allowed real interest rates to deviate from equilibrium levels.

Responding to a question on the relationship between coalition governments and economic reforms, Goyal said political stability enables the government to take a long-term view. However, a stable coalition can be equally effective. He said the two chief ministers (N Chandrababu Naidu and Nitish Kumar) in the current NDA alliance are committed to development, which is in line with the primary objective of the NDA government.