Meanwhile, the Union Cabinet will meet this week to discuss the statehood Bills for Vananchal and Chhattisgarh. Parliamentary Affairs Minister Madan Lal Khurana said that the Bills would be brought to Parliament in this session. This follows intense pressure from BJP and Samata Party MPs from Bihar. The Uttaranchal Bill, on the other hand, might be postponed until a settlement is reached on Uddham Singh Nagar.

The BJP's volte face on the IRA Bill came at the meeting of the BJP Parliamentary Party (BJPPP) this morning after RSS chief Rajju Bhaiyya intervened in the confrontationbetween hardliners and moderates.

The BJP's decision to support the Bill was taken at last night's meeting of the party's central office bearers. Faced with visibly upset BJP leaders, Advani admitted that it had been a mistake not to consult the party before taking a step that goes against its economic policy. It was agreed at the meeting that the government would take the party into confidence before taking any step on matters beyond the National Agenda for Governance and BJP manifesto (as the IRA Bill is). The allies views would also be taken into account.

Following this, hawkish MPs like K R Malkani, Virendra Singh and Arun Shourie kept their thoughts to themselves at today's BJPPP meeting. In fact, Shourie is learnt to now be lobbying for the Bill with doubtful party MPs and negotiating with S Gurumurthy of the Swadeshi Jagran Manch which is unrelenting in its opposition to the legislation. Union Minister Uma Bharati, another vociferous dissenter, was absent.

The Bill will provide for 26 per centforeign equity and 14 per cent NRI investment and is likely to be introduced in the Lok Sabha this week. The government has told the Lok Sabha Speaker that it will inform him tomorrow on when it would like to table the Bill. The Finance Ministry has already sent a notice to the Lok Sabha Secretariat that it would like to introduce the legislation.

Finance Minister Yashwant Sinha painted a grim picture of the economy at the BJPPP meeting. MPs -- a majority of whom are still opposed to the Bill on principle but have fallen in line -- were told that the economy was ``very fragile''. Foreign investors had made the Bill a test case, Sinha said. Foreign investment would pour in if the Bill was passed, he added.

Sources said that MPs were warned that the economy was in dire straits. Though India had been insulated from the turmoil in South East Asia, the international economic situation was not encouraging. Mention was also made of the fact that the National Calamity Relief Fund did not have any funds in itskitty (as revealed by The Indian Express today).

Briefing journalists about the meeting, Madan Lal Khurana said that $ 25 billion per year were needed to create a strong infrastructural base in the country; and that it would not be possible to generate this money domestically.

Trying to make the Bill more palatable to MPs, Advani pointed out that even the Congress and CPI(M) had reversed their policies as the situation changed. The Congress had de-nationalised banks and gone in for liberalisation after years of socialism, he said. MPs were also told that this Bill had several safeguards, unlike the previous one piloted by the United Front government which the BJP had opposed in Parliament then.

On the other hand, this Bill prevents foreign companies from taking their dividends out of the country and protects policy holders, they were told.