India's new government has made fighting inflation its top priority, easing concern about the potential for conflict with the country's hawkish central bank.
Outlining Prime Minister Narendra Modi's economic plan to parliament earlier this week, President Pranab Mukherjee said the government would address bottlenecks that have caused food prices to rise more quickly in India than in other major economy.
Annual consumer price inflation in India, Asia's third biggest economy, hit a three-month high of 8.59 percent in April – driven mainly by higher food prices.
The Reserve Bank of India has hiked interest rates three times since September to curb inflation and there was some debate before Modi's landslide election win last month about whether the new government would pressure the central bank to pull back from its hawkish inflation stance.
"Despite worries that they [the government and central bank] would come with two different agendas, the finance minister has adopted a conciliatory tone talking about the need for inflation control and implementing measures, both short-term and long-term," said Radhika Rao, an economist at Singapore-based bank DBS.
"Of course much of this is still rhetoric and we have yet to see anything material," she added.
Still, analysts said it's a positive sign that India's new government is making the right noises about structural reforms to tackle inflation.
According to reports in the local media, India's finance ministry is expected to submit a plan to address supply-side issues to tackle inflation to Modi soon.
Containing inflation is not an easy task, say analysts, since warehouse shortages, irregular supplies of vegetables in a mainly vegetarian country and weak infrastructure can all contribute to volatility in prices.