"There is obvious scope for win-win arrangements," he said inaugurating the "Hindustan Times leadership initiative -- the peace dividend: progress for India and South Asia" conference in New Delhi yesterday.

On `win-win arrangements', he said the hydroelectric projects in Bhutan illustrates this dramatically. "Bhutan's percapita income of $600 today is expected to double by the end of 2005 when the 1,020-MW Tala power plant is completed."

He said energy is one area with the greatest promise of mutually enriching partnerships. Apart from Bangladesh's promising gas reserves, he said, Nepal and Bhutan have an estimated potential of 100,000MW of environmentally clean hydropower.

On water issue, the Indian PM said: "The optimum management of our regional water resources for irrigation, navigation and flood control can have a multiple effect on infrastructure, development and growth in our entire region.

"This requires not only financial investments, but also maturity of policy. We should recognise that an enduring partnership can only be built on the basis of each country wisely exercising the rights of a lower riparian and responsibly fulfilling the obligations of an upper riparian."

He said the most important common war at present was against poverty, disease, hunger and underdevelopment. All must share experiences and promote intra-regional linkages for economic and social development.

"A small, but significant, beginning has been made by our Saarc experts group on poverty alleviation. The group, drawn from all Saarc countries, has extensively documented best practices in poverty alleviation programmes across the region," he added.

The Indian prime minister said, "As we develop greater economic stakes in each other, we can put aside mistrust and dispel unwarranted suspicions. We will also develop mutual sensitivity to each other's concerns and promote more of our common interests."

He said providing legitimate avenues of free commercial interaction, black market and underground trade could be eradicated. Smuggling, drug trafficking, money laundering and other trans-national crimes could be jointly tackled which flourish because of mutual rivalries and inadequate coordination among the nations of the region.

"Once," Vajpayee said, "We reach that stage, we would not be far from mutual security cooperation, open borders and even a single currency."

The Indian leader also advocated for regional trade. "By most estimates trade within regions accounts for nearly three-fourths of global trade. Yet, in spite of our geographical proximity, shared economic characteristics and similar development infrastructure, intra-South Asia trade is under 5 percent of our total foreign trade," he regretted.