"Some bitter medicine has to be taken this year. We have to take some bitter medicine. There is no other way...this bitter medicine is good medicine.
"It will restore the health of the economy and next year we can look forward to much higher growth," he said in the Lok Sabha winding up a discussion on the first batch of supplementary demands for grants for 2012-13 in the Lok Sabha.
After growing at over nine per cent, the GDP slipped to nine-year low of 6.5 per cent in 2011-12 and during the current year, as per the RBI projection, is estimated to be 5.8 per cent.
Earlier addressing the 'Delhi Economics Conclave', the Minister promised to take "more steps" in the next few days to help turn the economy around.
"However, every country has to introspect on whether the domestic and external issues have been diagnosed correctly and whether the policy options have been exercised adequately and effectively," he said, adding India weathered the 2008 crisis well.
Chidambaram expressed confidence that inflation, which has continued to remain a concern and a challenge, would moderate in the next two to three months.
"Inflation is a challenge. Inflation worries the government. While CPI inflation is sticky, good news is that WPI inflation seems to be trending downwards...If it trends downwards, there will be some reason for comfort," he said.
The WPI inflation, which is based on movement in wholesale prices, moderated to 7.24 per cent in November from 7.45 per cent a month ago. The retail inflation, however, was at 9.9 per cent in November, up from 9.75 per cent in October.