"Everything will be fine soon," Modi said on being asked about ceasefire violations by Pakistan. He was attending the 'At Home' organised by Indian Air Force Chief Arup Raha on the occasion of Air Force Day.
Modi did not speak further but top government sources said India will not give in to "coercive diplomacy" by Pakistan and will respond strongly to Pakistani shelling.
Five civilians were killed and thousands took refuge in camps in Kashmir on Wednesday, after some of the most intense fighting between Pakistan and India in a decade.
A total of nine Pakistani and eight Indian civilians have been killed since fighting erupted more than week ago in the region.
The government on Wednesday said India would continue to respond to Pakistan on the ceasefire violations.
"According to the situation, there is not going to be any flag meeting because our forces are responding appropriately. We will see whatever outcome is there," Union Minister of State for Home Affairs Kiren Rijiju said.
The government had on Tuesday said it would observe Pakistan's "behaviour" in the coming days before taking a decision on flag meetings.
Indian forces will not do anything to escalate the situation but respond according to the situation, he said.
"We have to see that the situation does not go out of hand. Everything is taken good care of by our forces. Even though our prime minister is campaigning, it does not mean that he is out of touch with the ground situation. Directions are being given," he said at an election rally here.
Addressing a series of rallies in Karnal, Faridabad and Kaithal, Union Home Minister Rajnath Singh assured people living in bordering villages of Jammu and Kashmir that they would soon return to their homes as "misadventure" from Pakistani side will be responded adequately.
"The situation in India has changed and Pakistan should understand this," he said.
The sources cited media reports in Pakistan to say that 35 people have been killed in the last two days on that side - 20 on Tuesday and 15 the previous day.
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