"Higher petrol price will lead to lower inflationary regime with lower demand. But, it is a long term mechanism," Anant told the the Merchants'' Chamber of Commerce.
Though, rising petrol price would lead to higher inflation in the short term, but since overall demand would diminish in the longer run, it would help in addressing inflationary pressure, he said.
He said the government should narrow the gap between wholesale and retail price of food products. Anant suggested that allowing FDI in retail would in turn will help in increasing competitive pressure in food prices.
He said the Reserve Bank of India's actions (hiking rate) were short term measures based on the phenomena of expectations.
There is a need for an effective mechanism for handling the transformation of the total cycle, he added.
The Reserve Bank today raised key policy rates by 25 basis points, its 12th such hike since March, 2010, to rein in rising prices.