Prime Minister Atal Bihari Vajpayee on Monday said India is prepared to meet any grim situation emerging out of a possible US-Iraq war.

Replying to a long debate on the motion of thanks on the President's speech in the Lok Sabha, the prime minister said that heads of other governments, who had of late visited India, were all of the view that there would be a war.

He said he was concerned about the welfare of the four million (40 lakh) Indians working in the Gulf countries.

Referring to the NAM summit that he attended recently at Kuala Lumpur, Vajpayee said the assembled leaders discussed the issue of terrorism with utmost concern as they all agreed that it was the biggest challenge before everyone.

Denying the opposition charge that the government is using terrorism to polarise society, Vajpayee said one should not stoop to such levels. He also denied any attempt to divide the people along religious lines.

Claiming that there has been an increase in the inflow of foreign exchange during the current fiscal year, the prime minister said that it would not be correct to say that there was a decline in interest to invest in India due tensions with Pakistan.

Vajpayee accused Islamabad of creating tension between the two countries and regretted that the United States had failed to persuade Pakistan to stop indulging in cross-border terrorism.

"This (failure) showed America's weakness and we will keep this in mind while evolving future strategy," he told the House.

Touching upon the drought situation, the prime minister said that though 14 states were badly hit his government did not let the situation go out of hand and ensured prices of essential commodities did not shoot up and proper distribution of foodgrain.

On the charge that the government was adopting double standards on the matter of foodgrain distribution, Vajpayee said 2.9 million (29 lakh) tonnes of foodgrain has been allotted to Rajasthan, constituting 44 per cent of the entire quantity that was distributed to drought affected states.

In addition, he had given Rs 500 million (Rs 50 crore) to Rajasthan from the prime minister's fund when he visited the state earlier. This, however, did not mean that his government had done any favour to Rajasthan, he added.

Before the House adopted the motion by a voice vote, it also witnessed the rare spectacle of a brief sparring between Vajpayee and Sonia Gandhi on the issue of the government's promise to provide jobs with the Leader of the Opposition taunting him as to what had happened to the promise.