Inflation declining further - Kamal Nath

NEW DELHI (Reuters) - India's inflation should decline further in the coming weeks and the government may consider more steps, such as banning futures trading in some essential commodities, the trade minister said on Sunday.

"The fact of the matter is this: we have taken steps (and) the decline has started," Kamal Nath told the news channel CNN-IBN in an interview aired on Sunday, according to a transcript provided by the channel.

"The decline is small and we expect the decline in inflation to be much more."

Inflation hit a three-year high at the end of March, with the wholesale price index rising by 7.41 percent over the preceding year. The rate slowed slightly to 7.14 percent in the 12 months to April 5, according to government data.

"Any decline is reversible but we are confident that this decline is only going to be more," Nath said, adding that the government was prepared to control inflation even at the expense of the country's growth rate.

He said he would not rule out banning futures trading in some essential commodities if speculation was seen to be contributing to inflation.

"If forward trading is the reason for inflation, why wouldn't we do it?" he said when asked about a possible ban.

The government has already ordered several duty cuts and export bans in recent weeks to ease price pressures. On Thursday, the Reserve Bank of India raised the cash reserve ratio by 50 basis points to 8 percent to calm inflation in Asia's third largest economy.

Nath also said that private companies buying up commodities directly from farmers was not a problem at present, but restrictions may be put in place should that change.

"If we find our procurement targets are not being met we will look at restraining the private sector from buying," he said.