But he added that the government was determined to control inflation, the latest round of which was linked to a fuel price increase.
Speaking two days ahead of a monetary policy review by the central bank, Chidambaram said it was up to the governor of the Reserve Bank of India to decide on rates.
"We have already said the effect of the fuel-price pass-through will impact inflation," Chidambaram told reporters after addressing a gathering of bankers in Bangalore, adding it was about one percentage point, as expected.
"But I think the effect of the past is over. I hope there is no second order inflation. We will take fiscal and monetary steps to control inflation," he said.
India imports 70 percent of its crude oil. Despite a rise in global oil prices, Indian customers pay less as the government administers prices through state-controlled petroleum companies.
Though there has been one round of fuel price increases, it has not bridged the gap with international levels.
Asked about his expectations for the interest rate regime, Chidambaram said: "I hope it will remain benign. But if there is a fuel price increase and as a result of that there is a certain amount of inflation, then it is for the governor (of the central bank) to take steps."
The central bank is expected to raise its key short-term reverse repo rate, the benchmark for short-term money market rates, at its monetary policy review on Tuesday.
Of 15 analysts polled by Reuters, 13 expect the Reserve Bank of India (RBI) to raise the rate by 25 basis points to 5.25 percent.
India's wholesale price index, a widely accepted benchmark, rose more than expected in the year to October 8 in data released on Friday, hitting a four-month peak, reinforcing expectations that the central bank will raise rates to rein in inflation.
The inflation was at 4.62 percent on higher food and manufactured product prices, higher than the 4.54 percent median forecast in a Reuters poll.