Inaugurating a conference of the chiefs of police forces of the country, Chidambaram also expressed concern over the situation in the Kashmir valley and hoped that in the next few days, a "starting point" would be found to reach out to the protestors and restart the process of a dialogue.
"There is no let-up in the attempts to radicalise young men and women in India. Besides, there is the recently uncovered phenomenon of saffron terrorism that has been implicated in many bomb blasts of the past," he said.
Chidambaram said beginning 2005 and with the exception of 2008, the law and order situation in Jammu and Kashmir has been extremely benign, with few incidents and fewer casualties.
Unfortunately, since June this year, there has been an unexpected turn of events, he said.
"I am afraid J&K is now caught in a vicious cycle of stone-pelting, lathi-charge, tear-gassing and firing, leading to casualties and resulting in more stone-pelting," he said.
The home minister said the security forces have been instructed to act with great restraint, but the situation has not yet returned to normal.
Chidambaram said the central government has acknowledged that a political solution must be found to the problems in J&K, and it has offered a dialogue with all sections of the people and political parties and groups of the state.
"We are concerned that we have not been able to stop the vicious cycle in which the state is caught. However, it is my hope that, in the next few days, we would be able to find that elusive 'starting point' from where we could reach out to the protestors, reassure them of their rights and dignity, restore peace and order, redeem the promises made, and re-start the process of a dialogue that will lead to a solution," he said.
Chidambaram said through 2009 and in the first eight months of 2010, the security situation was severely challenged by forces inimical both within and outside the country.
"Contrary to perceptions in a section of the media -- and consequently, among sections of the people -- the Indian State has been able to stand up to these challenges and face them with confidence and courage," he said.
The home minister said save for one incident, the last 21 months have been remarkably free of any terrorist attack, and the attack on the German Bakery in Pune was indeed a blot and hoped that the suspects will be apprehended soon.
Referring to the Naxalite problem, Chidambaram said despite setbacks, security forces have been able to reassert their control in several Maoist affected districts.
He said this year alone, so far 424 civilians have been killed and of these 192 were killed after being named "police informers".
"We have called upon the Communist Party of India-Maoist to abjure violence and come for talks. I regret to say that there has been no direct and credible response to our offer of talks," he said.
Maintaining that one of the principal concerns of the government is the maintenance of communal peace and harmony, the home minister said he was particularly dismayed by the fact that petty disputes and imagined slights trigger conflicts between communities and groups.
"The Scheduled Castes are especially vulnerable," he said. Chidambaram said it was a matter of satisfaction that there has been no major outbreak of communal or caste violence in the last 12 months and urged police officers to remain vigilant. At the first sign of communal or caste violence, you should depute senior officers to deal with the situation firmly and without fear or favour," he said.
The Home Miniter said the best record of achievement in containing terrorism has been in the north eastern states where in 2010 "we have seen a dramatic decline in the number of incidents and in the number of casualties" though Manipur and Assam have been affected by long-duration blockades and bandh and by intermittent violence.
Chidambaram appealed to the groups that have stayed away from talks to give up violence, accept the offer of talks, enter into agreements of ceasefire and begin talks with the government's representatives. "I am confident that solutions can be found within the Constitution of India to the demands of various groups for recognition of their identity, history, culture and desire for self-government. The best example is the Bodo Territorial Council which has turned out to be a model of self-governance within the state of Assam and within the Constitution ofIndia," he said.
Acknowledging the cooperation extended by the state governments, the home minister said the prime mover was always policy and experience showed that if there was clarity of purpose and a well-enunciated policy, the security forces would be able to deliver.
"For example, we announced a policy of zero tolerance of cross border terrorism, and we initiated a number of steps to build capacity, augment intelligence, raise special forces, acquire modern equipment, impart better training and take counter-terrorism measures," he said.
