He said that impact of Kargil on Pakistan would be many times more compared to that on India as Islamabad was already in `deep trouble' before the conflict started. "Kargil conflict will not pose any threat to Indian economy as it will indeed do to the Pakistan economy. There is no need for any mid-term fiscal correction," Sinha told PTI in an informal chat.

At the same time, he said the government would "fully meet" the defence requirements. "Whatever will be the requirements of funds by the ministry of defence or armed forces will be fully met. There should be no doubt either on our willingness or our capacity to meet the requirements of defence," he said.

India has provided for a total of Rs 45,694 crore towards defence expenditure in the budget for current financialyear, up from Rs 41,200 crore in the previous year. Pakistan spent a total of Rs 14,500 crore on defence during the last financial year.

Asked about the impact of any prolonged conflict, Sinha said "it is a hypothetical question. As of now the assessment of the government is that the impact will be limited and well within our capabilities".

Sinha today said Indian economy was showing "tender signs" of coming out of the worst ever economic crisis the nation has faced. "The challenges of 1998-99 were much greater than ever before. Economic crisis in 1991 was largely thrown up by circumstances at home and the Gulf war was just incidental. But the problems of last 15 months were brought about by both domestic and external factors," Sinha said.

He said that the economy was showing signs of revival and prophets of doom were proven wrong. "We have tender signs of revival. One has to wait and see if it endures." To buttress the argument, Sinha said that tax collections in the first two and a half months wasextremely encouraging and way above the revenues during the same period last year.

"It is not a flash in the pan," Sinha said adding that encouraging information of collections from excise, customs, corporate and personal income tax was flowing in continuously.

Sinha today said the Reserve Bank of India (RBI) should take whatever steps it considers fit to maintain stability of rupee as it was RBI's responsibility to monitor foreign exchange market. Asked about the wide fluctuation in value of rupee and its decline following escalation in tension in Kargil, Sinha said "it is the duty of RBI to keep a watch on the foreign exchange market on a day to day basis and take whatever action it considers fit under the circumstances."

Making it clear that the finance ministry had no role in monitoring the foreign exchange market, Sinha said "I think the RBI is doing its job very well." He, however, said India was quite comfortable on the foreign exchange front with reserves swelling to an all time high of $ 33.5billion.

India is likely to oppose further disbursement of International Monetary Fund (IMF) loans to Pakistan, in view of the reported diversion of funds for the Kargil conflict. Further tranches of about 250 million dollars of IMF loan to Pakistan is due from July