India welcomed 2004 with a cautious but overwhelming optimism. Two of the major portfolios, economy and bilateral relations with Pakistan (read this as cross-border terrorism), that impede our progress are getting properly shaped and this would fuel India's growth. If this cautious optimism bears fruit, there is no doubt that our President's vision for India 2020 would come true.

Firstly, the growing foreign exchange reserve and the unprecedented Foreign Direct Investment in India in 2003 to the tune of $7500 million added strength to our economy. The 8 % growth rate in the second quarter of the current fiscal year and the stock market boom (crossing the 6000 mark by the time the new year dawned) enhanced our optimism. The analysts say that these macro economic indicators are rooted in the fundamentals rather than due to the false boom. The copious monsoon in most parts of the country and the growth coming from all the three sectors- service, agriculture and manufacturing- is really heartening and we have every reason to feel proud about our splendid performance. Even in the best of times after economic liberalization, the high growth rate albeit lower than what we have achieved till now in the current financial year, was achieved mainly due to the growth in service industry while agriculture and manufacturing were not been able to contribute their might. This year, unlike in the past, the manufacturing and agriculture sectors also contributed to the GDP growth rate. This makes us to believe that the current optimism can be consolidated to realize our greater ambitions.

While our economy is posting a good balance sheet, we have covered a few more miles in our foreign affairs especially with our neighbour countries. Truly, India is being looked upon as the big brother by the small countries in the region. If there is a positive effect for any event that happens in the world, more than to anybody else, the September 11 attack on twin towers in USA had fetched maximum positive impact to India. Our diplomatic brains worked hard to turn it to India's advantage and kept harping on the negative consequences of abetting terrorism. It made USA, the allay of Pakistan to put pressure on Pakistan and Pakistan has to concede that India's concern about terrorism is valid. This left Pakistan with no other option than to promise India that it would not allow any terrorism to be groomed from within its borders. In the joint statement issued by both the countries alongside SAARC Summit, India has agreed for a "composite dialogue" and Pakistan in return has agreed to contain "cross-border terrorism". The support and conviction carried by all the regional countries including Pakistan to combat terrorism is laudable. This is one of the remarkable achievements of the recently concluded Summit. The Sri Lankan President praised the Indian Prime Minister for his campaign against terrorism. Nepal and Bhutan expressed sentiments of courage in combating ULFA terrorist activities. Our Prime Minister's proposal to SAARC nations to constitute a "Fund for Poverty Alleviation" and India's generosity to offer $100 million as initial contribution for poverty alleviation programmes and projects outside India is a laudable gesture. This would enhance the goodwill amongst the regional member countries. In the recently concluded 12th SAARC Summit in Islamabad, India put up a good show. Kudos to our wise Prime Minister Mr. Vajpayee, our intelligent and tactful Foreign Affairs Minister Mr. Yashwant Sinha and the brilliant Principal Secretary to our Prime Minister and National Security Adviser, Mr. Brajesh Mishra. Our Prime Minister did not show any over-enthusiasm to go for bilateral discussions with Pakistan President but at the same time evinced genuine interest and commitment to normalizing the relations with Pakistan. Our diplomats led by Mr. Mishra was relentlessly and tactfully carrying on with the "behind-the-doors" negotiations with Pakistan officials all these days. The word "agreement" instead of "draft declaration" derailed the entire efforts of Agra Summit. Our External Affairs Minister Mr. Sinha was very patient during his interviews with the Pakistan media all through the Summit period and put all the learnings from the past experiences into the best use. 

It is extremely heartening to note that the Pakistan Foreign Minister, Khurshid Mahmud Kasuri hoped that the Srinagar-Muzaffarabad bus service, proposed by India, would begin before the commencement of the "composite dialogue" proposed for in February. The point to be remembered here is that Pakistan initially objected to this proposal. Also, Pakistan appears to be keen on sustaining the momentum generated by the recent thaw in the Indo-Pak relations. Pakistan is keen to have Deputy Prime Minister L K Advani in Pakistan to discuss among others a "structured dialogue" to work out an extradition treaty between the two countries which is again another major thorn in the relationship between the two countries. So is the shift in Pakistan's stance that it has agreed to offer "Most Favoured Nation (MFN)" status to India. In spite of the fact that we have accorded Pakistan the MFN status long back, it was not willing to offer MFN status to India till now. It is truly a remarkable achievement and marks the much-wanted progress in the bilateral relations. Although South Asian Free Trade Agreement (SAFTA) has been hanging for the past 7-8 years, this time, the coming together of India and Pakistan, the two stalwarts of the region and the structured step by step framework to implement the free trade agreement lends credence to the renewed efforts. 

The first milestone of 2006 by when the tariffs have to be reduced to 20% by the developed countries in the region can be achieved. However, the process has to be taken further to its logical conclusion in making the trade amongst the regional countries truly free and fair. If SAFTA is implemented with true spirit, the day is not far away when SAARC countries would form a cohesive economic union where the intra regional trade would go up from the current 5% to at least 25-30% of its overall trade. It should not be delayed further as the illicit trade is almost three times more than the official trade between India and Pakistan. The crucial factor to make SAFTA a reality is to take care of the interests of the least developed countries in the region and the negative lists of each country to be agreed to by the other regional countries. If statesmanship and vision prevails with our political leaders and decision makers, SAFTA would not go back to dormancy as it did all these years. SAFTA is indeed a remarkable achievement of the 12th SAARC Summit. "Economic Union" is the answer to all the chaos and ills created by political separations. More than the political sovereignty, economic well-being of the region and the member countries is the only panacea for all the impending issues amongst us. All the other regions in the word has risen upto the occasion and South Asia should not lag behind them. If the partition is going to be nullified by this economic unity, so be it and it would be welcomed by the people in both India and Pakistan. If nothing else, progress in cementing Indo-Pak relations is the much wanted outcome of the 12th SAARC Summit and for this, it would go down in the history as the successful SAARC Summit. Whether this success is to be interpreted as the continuation of the Srinagar peace initiative of Prime Minister Vajpayee (as India claims) or as the critical decision of Gen Musharraf to accommodate the Indian position on "terrorism", it is suffice to say that there is a positive change in the mindset on both sides. The coming years would definitely see a sea change in our bilateral relations and strengthening our economic ties and people-to-people contact is the only way to achieve this healthy relationship.