Indian aid for Sri Lanka

Indian and Sri Lankan foreign ministers had two rounds of talks

Indian has offered a loan of $100m to Sri Lanka and called for a political solution to the island's ethnic conflict.

The offer came after talks in Colombo between the visiting Indian Foreign Minister, Jaswant Singh and Sri Lankan leaders.

Sri Lanka urgently needs money and weapons to combat an offensive by Tamil Tiger rebels in the northern Jaffna peninsula.

When fighting escalated in April, the government said the defence budget would have to be raised by at least $175m to $880 m.

Jaswant Singh said the loan was to "ease any constraints that may be currently faced by Sri Lanka".

Mr Singh is the first Indian leader to visit Sri Lanka since New Delhi rejected Colombo's call last month for military assistance.

During his overnight visit, he met Sri Lankan President Chandrika Kumaratunga, opposition leader Ranil Wickremesinghe and foreign minister Lakshman Kadirgamar.

Productive talks

Mr Singh and Mr Kadirgamar had two rounds of talks, which a joint statement described as productive.

"There was an understanding on the measures that India and Sri Lanka can take both collectively and individually, to bring about lasting peace," the statement said.

But there were no indications on India's role to bring about an end to the drawn out conflict.

India last month ruled out any military assistance to Sri Lankan troops, who over the past few months, have suffered a string of heavy defeats at the hands of Tamil Tiger rebels.

Bitter experience

India is wary of direct military involvement because of its experience in the late 1980s, when it lost 1,200 soldiers who were part of a peace-keeping force in northern Sri Lanka.

The soldiers were hastily withdrawn in 1990 and Delhi has stayed on the sidelines since then.

But recently, India has backed a negotiated settlement to the conflict and has said it would mediate if invited to by both sides.

The 17-year long conflict has claimed more than 60,000 lives.