The Indo-Pakistan situation at present is the best in the three years of the Bush Administration, Deputy Secretary of State Richard Armitage has said.

"We are urging both sides not to lose the momentum that they themselves have developed. Prime Minister (Atal Bihari) Vajpayee, since his rather dramatic statement in Srinagar, has had his desire to extend a hand," Armitage said in an interview to The Financial Times.

"Whether they will actually grasp each other, we will see. Right now they're enormously in a better place than they were just two months ago with the ceasefires at the Kashmir Line of Control and the Siachen Glacier, with the high level visits, high-level diplomatic exchanges, and the public announcement by the Prime Minister (Vajpayee) that he's attending the SAARC (summit).

"So both sides have, I think, greatly modulated the rhetoric and, at least for the 3 years that this administration has been around, it's the best place that India and Pakistan have been in," Armitage told the paper.

Pakistan Prime Minister Mir Zafarullah Khan Jamali, in his address to the nation on November 23, had proposed the ceasefire along the Line of Control. India subsequently came up with a positive response.

Prime Minister Atal Bihari Vajpayee had in November 2000 announced a Ramzan ceasefire in Jammu and Kashmir aimed at persuading militant groups to hold talks with the Centre's interlocutors.

However, Pakistan-based Hizbul chief Syed Salahuddin rejected the offer.

Armitage was on the defensive when the newspaper's correspondent pointed that there were rogue elements in or beyond the Pakistan military and within the Pakistan intelligence service, and that Taliban openly walked up and down the streets in Quetta.

"It would be, I think, unrealistic to expect that people who had spent the better part of the last 10, 12 years of their lives working with the Taliban wouldn't develop personal relationships, and also political relationships to some degree.

"But I'm absolutely convinced it is not the policy of the Musharraf government, that if one can point out who these rogue elements are, that they would not be allowed to participate any more," Armitage said.

On Afghanistan, Armitage said the US is planning to step up non-military aid to the war-ravaged nation. He said it was misleading to compare spending on US military operations in Afghanistan and its aid budget, which were 'like apples and oranges'.