An IB dossier claims that most of the funds raised by terror outfits come through self-styled NGOs and charity organisations.

According to the IB, there are at least 200 entities in Pakistan raising funds for terror operations.

The afore-mentioned document suggests that the nexus between Indian gangsters and Pakistan's Inter Services Intelligence, the ISI, agency is also getting stronger by the day.

According to the report, Maharashtra is a key transit point for funds, with most of the money landing there before being dispatched to the rest of the country.

An IB official told rediff.com that the financial channel is carefully monitored by terror outfits, and that the money ends up at the sleeper cells for use after passing through several levels.

IB sources say the money collected in Pakistan is transferred to Dubai through hawala operators before it reaches India.

The IB states that of late the base for the terror operations have shifted out of Kashmir, and attributes it to international pressure, the peace talks between India and Pakistan, and stepping up of security in the state.

However, the IB states that during a recent meeting convened by the ISI it was decided to bring Kashmir back on the boil, and that this may lead to renewed terror attacks in that state.

The government document also notes that the ISI has been stoking increased militancy in Punjab and the north-eastern states.

Since 2006 several terror cells set up by the ISI have been neutralised in Kashmir, forcing it to look beyond. The ISI then re-launched its Operation Pin Code and Operation Topac with a view to destabilising the entire country. That is where Punjab and the north-east come in.

The IB report says the Ludhiana blasts of October 2007 indicate that the ISI is desperately trying to revive Sikh militancy which had died a natural death in the late 1980s. The ISI has taken upon itself to roil Punjab so that it could have a partner in carrying out terror operations.

The IB also states that the ISI has been trying to improve its ties with militants in the north-east. The arrest of six People's United Liberation Front members in Karnataka recently pointed to the ISI's plans for the region. The six men had been suspended from the PULF over their links with the ISI, and the internal clashes over its involvement with the indigenous militant groups.

The first stage in Topac and Pin Code involves low-level insurgency through placing operatives in key locations across the country with a view to subverting the police force, communication networks, and financial institutions.

Phase two, which is underway, deals with stepping up terror in the border areas and elsewhere, through the Afghan mujahideen and Bangla militants who will have entered the country to carry out terror strikes.