"We are willing to discuss all issues, including Jammu and Kashmir. But the route of cross-border terrorism cannot go on. There has been no benefit from it and there cannot any benefit in future."

It was up to Pakistan to respond positively to the hand of friendship extended by him by ensuring an end to cross-border terrorism and infiltration, he added.

"What has happened in Iraq is a warning, particularly to developing countries who are struggling to get out of poverty and economic difficulties. I would not like to elaborate but would stress that the international situation is changing very fast," Vajpayee said in response to a question when asked if the situation on the ground level has changed to warrant Indo-Pak dialogue.

"Past failures should not stand in the way of making a new beginning. I have extended the hand of friendship and it is for Pakistan to respond. The day Pakistan stops cross-border terrorism and dismantles terrorist camps, I would send a senior official of the ministry of external affairs to Pakistan to firm up the details (for talks)," he said.

"I did not mention the massacre of the 24 Kashmiri Pandits in Nadimarg because I wanted to make a new beginning and Chief Minister Mufti Mohammad Sayeed's policy of providing a healing touch is a good one."

"But this healing touch is only for those who have suffered from terrorist violence and not for the perpetrators of that violence," he said.

"When I was travelling to the airport by car, I wondered if I would ever be able to walk in Srinagar without police escort. The changing international scenario makes one believe it is possible some time in the future," he said.

He refused to answer a question regarding a successor to J&K Governor Girish Chander Saxena who retires on May 1, 2003.

Admitting that the people of Jammu have problems of their own, he denied there was any discrimination in dealing with them.

He announced that he would soon visit Jammu and talk to the people.

He said that Kashmiri Pandits have a right to return to their homeland and those willing to go back to the valley would be given full protection by the state government as well as by the Centre.

Vajpayee said third party mediation on Kashmir would only worsen the matter.

He said that he had not presented any economic package to then state as his office is still monitoring the implementation of the one announced in May 2002.

He said the Union Government in coordination with the state government would generate 100,000 jobs and self-employment opportunities in the state in the next two years.

"I have decided to set up a special task force comprising representatives from the Centre, state, industry, commerce, banks and financial institutions to suggest ways to make this possible. The STF will submit its report before June 30 and implementation of the plan will begin by August 15, 2003," Vajpayee said.

The Centre would also help J&K revive the tourism industry.

The government will get a special committee, comprising representatives from the ministry of tourism of the Government of India, state government and the industry, to prepare a comprehensive Tourism Revival Plan before June 30, 2003.

Towards this end, the approximately 1,200 houseboat owners in the Dal Lake and 500 small hotels in Srinagar would be allowed to avail of long term loans with low interest rates.

Addressing the problem of power shortage, the prime minister said the Centre would speed up the ongoing power projects in the state and see how some of the unviable projects could be made viable.

During the course of the day, the prime minister laid the foundation stone of a railway bridge and inaugurated six computerised railway reservation centers in various parts of Jammu and Kashmir, but bad weather forced cancellation of his visit to Qazigund in Anantnag district.

Railway Minister Nitish Kumar announced the Jammu-Udhampur railway line would be completed by March next year while the Udhampur-Baramulla project would be completed by 2007.

The Udhampur-Baramulla line would pass through Katra and Qazigund, which Kumar described as the 'most difficult section' and said the project was being executed by IRCON and the Konkan Railways.