India on high alert as PM vows to "neutralise and smash" militancy

INDIA: Prime Minister Manmohan Singh Tuesday vowed to "neutralise and smash" militancy as India celebrated its 59th Independence Day on high alert against Islamic rebels.

"Terrorists want to undermine our growing economic strength, destroy our unity and provoke communal incidents," Singh told the nation, just over a month after Mumbai train bombings blamed on Muslim militants killed 183.

"We cannot allow this to happen... We will not allow the secular fabric of our country to be broken (and) we will leave no stone unturned in ensuring that terrorist elements in India are neutralized and smashed," he said from a bullet-proof enclosure at the Mughal-built Red Fort in the Indian capital.

"Let those who want to hurt us by inflicting a thousand cuts remember - no one can break our will... No one can make India kneel."

On Friday the US embassy in New Delhi said militants, possibly Al-Qaeda, may be planning a series of blasts around Independence Day. India dismissed the warning as "innocuous" but ratcheted up already-tight security even further.

Some 10,000 security personnel Tuesday guarded the Red Fort while another 90,000 kept a vigil across New Delhi, which was guarded during Singh's address by military helicopters.

Combat troops also occupied streets in Indian-administered Kashmir, where the smothering security and a total strike called by Muslim separatists kept most people indoors, an AFP correspondent said.

Singh in his address said an "environment of peace" was necessary for nuclear-armed India and Pakistan to resolve long-running disputes.

"Unless Pakistan takes concrete steps to implement the solemn assurances it has given to prevent cross-border terrorism against India from any territory within its control, public opinion in India, which has supported the peace process, will be undermined," he said in a reference to the Pakistani sector of Kashmir.

"We are prepared to work together with all our neighbours to usher in an era of peace and prosperity for our peoples.

"We have taken several initiatives in this regard, in particular with Pakistan. To be successful, these initiatives need an atmosphere of peace," he said.

Earlier Indian Prime Minister Manmohan Singh said the government would do everything possible to keep inflation in check but there were limits to what it could do to insulate people from the effects of record high oil prices.

"I know each of our families is concerned about the prices of essential commodities," he said in a televised Independence Day address to the nation.

But Singh, the architect of India's economic reforms more than a decade ago, said there was a limit to how much the government could subsidise petroleum products in the face of rising import costs.

"How much more can the government treasury bear this burden?" Singh said. "At some point, this will affect our ability to spend on other important development programmes."

India imports 70 percent of its crude oil needs and policy makers say high global oil prices are a concern for the economy.

India raised petrol and diesel prices in June, easing a little of the pressure on refineries saddled with losses from rising crude prices.

"I must remind you that two years ago the international price of oil was just over $30 per barrel. Today it is close to $75," Singh said.

"Even though world oil prices have more than doubled, we have succeeded in insulating our consumers to a great extent." India's central bank expects wholesale price inflation to be in the 5.0-5.5 percent range in the fiscal year to March 2007.

New Delhi, Tuesday, AFP, Reuters