Finance Minister Jaswant Singh said on Tuesday the government and the central bank were closely monitoring rising inflation and expected "a correction" soon.
"Of course, I am concerned at the rate of growth of inflation. The two factors which are responsible are the drought and the Gulf war," Singh told Parliament.
"The finance ministry and the Reserve Bank of India are closely monitoring the situation and soon we will witness a correction."
India's inflation in the week ended April 12 rose to a new two-year high of 6.47 per cent from 6.17 per cent in the previous week and 1.37 per cent in the same week a year earlier.