Naresh Chandra, 79, wears many hats. The retired Indian Administrative Service officer has served in various capacities in the home, finance and agriculture departments at the state-level and the Centre. He retired as Cabinet secretary, the head of the Indian civil service, in 1992.

He turned diplomat in 1996 and served in Washington as Indian ambassador to the United States successfully.

He drafted the much-talked about white paper on the Babri mosque demolition in Ayodhya. Recently, he retired as chairman of the National Security Advisory Board.

He is highly active in the corporate sector as well, both in India and internationally. He is a member of the Indian advisory group of the world's largest spirits company Diageo, which boasts brands like Johnnie Walker and Smirnoff.

Since long, he has been associated with Vedanta, Cairns India, Escorts and Bajaj amongst other companies.

He abhors Left-leaning or Left-of-Centre policies, but he believes 'national interest' can't be based on any 'ism', Right or Left.

Allahabad-born and educated at district-level schools, Chandra can give high-flying technocrats and Western-educated young brains a run for their money in dissecting issues and suggesting practical solutions. He has a trained sense of 'what is the big picture' on any Indian issue. He is known for putting forward strategic issues with wit and dry humour.

Chandra, never short of expressions, shared an 'insider's view' on the India-Pakistan peace process in an exclusive interview with Rediff.com's Sheela Bhatt.

Are these skirmishes on the Line of Control stand-alone happenings? Or does it expose the fundamental faults in the ongoing India-Pakistan peace process?

First of all, I don't think it's a peace process yet. Dialogue is taking place between India and Pakistan to start something meaningful! Whatever moves (in the peace process) have been made so far are of an exploratory nature. You know, it is by fits and starts.

Some good statement of a general kind comes about, then on the ground some unfortunate incident takes place which diverts and upsets the applecart.

The (December 13, 2001) attack on Parliament, the 26/11 attacks, the action along the LoC in the form of infiltration from Pakistan are such issues.

Pakistan, as a State, does not have a unified or coherent facet with which a government can deal with. They have all kinds of desperate elements who can resort to violence from time to time.

It is not just beyond the border of Pakistan. You see the situation inside Pakistan.

There have been a large number of suicide blasts, thousands of Pakistanis have died. I believe some 7,000 soldiers and policemen have died in violent attacks.

Karachi is in a state of flux. They have serious problem in Quetta, in the Pakhtunkhwa areas.

Even the Taliban are not united. They have some four kinds of Taliban groups.

When we are dealing with a disturbed State which is at cross-purposes with itself, it is a very difficult situation.

At a diplomatic level you deal with the civilian government. What can the civilian government do on what goes on along the LoC?

In India, the army comes in to support the civilian government, but in the disturbed areas of Pakistan it is the other way around. There, the civilian government comes in to provide support to the Pakistan army.

The Pakistan army is in charge and they are the people who can make the difference. The main issue is this.

Pakistan, on one side, is fighting terrorism and mainly they are fighting the elements which are against Pakistan army.

The Pakistan army wants to encourage rest of the violent elements to keep the neighbours in check.

We are not the only victim of Pakistan using terror elements as their instrument. Afghanistan is also a victim.

Former Cabinet secretary Naresh Chandra's interview on the standoff with Pakistan continues:

Afghan President Hamid Karzai knows it very well. In Pakistan's civil society there are many who have a clear vision, but the better understanding of issues means they are less effective and lesser is their influence in Islamabad.

The process of democracy has somehow weakened the political parties. They are divided on the regional basis.

The Pakistan People's Party is dominant in Sindh and Nawaz Sharief's party is dominant in Punjab. The Pashtun areas are disturbed due to problems on the border with Afghanistan.

Added to this is the fact that the disturbed condition of Pakistan and its geographical position makes Pakistan very attractive for both, America and China.

In the short term and medium term, the civilians and army generals, who control the levers of Pakistan, live under the illusion that they are great diplomats and are successful in dealing simultaneously with China and the US. They are getting aid of all kinds from both of them.

But they are biting a poisoned apple. The diplomacy of Pakistan is wrecking the internal structure of the country. There are important analysts who feel that in another 15 or 20 years Pakistan might be a failed State.

Our problem is we are right next door. We will face lots of adverse consequences of Pakistan's internal failures.

We have been reading these arguments for the last few years. But it is clear to all that Pakistan has successfully dealt with America on the battlefield of Afghanistan by frustrating them in many ways.

Two, many Indian analysts have said that Pakistan is smarter in its diplomacy with India.

I said they (Pakistan government officials, generals and diplomats) are living under the illusion. You are quite right. They are successful in the short run and maybe, even, in the medium term.

But you have to see the long term. Every achievement has its cost. The cost that Pakistan is bearing is immense.

They are wrecking their economy, causing excessive amounts of pain to their people in terms of violence, deaths, loss of morale and loss of investment.

They are mortgaging their future to the short-term victory against India.

In their own way they are very successful in making the United States Congress pay their bills. On the other hand, if you see the most wanted list of the US, all over the world, then you will find a majority of them (the most wanted) are from Pakistan.

What the US really think about Pakistan comes out in many ways. They may sign fat cheques because they need to have their logistic support pushed to Afghanistan through Pakistan territory.

They may do some balancing acts with China through Pakistan because China is also waiting to grab more and more influence in this part of the world.

With respect to that, Pakistan is making the US pay. But look at it this way -- in the West and elsewhere abroad, most restaurants, which used to write on their menu 'Pakistani-Indian food,' are now writing only 'Indian food'. Pakistan has vanished from many menu cards.

The time taken for Pakistani passport holders to get visas in many countries is on an average three times that of other passport holders. So what is the overall gain?

One would like to disagree. To say that Pakistan is dismantling may be incorrect. Your facts may be correct, but at some other level there is something working as well.

During General Pervez Musharraf's rule the Pakistan economy was picking up. The Karachi stock exchange had shown its potential.

The point is that the first signal that Pakistan is dismantling and nearly becoming a failed State was in a report authored by the Council of Foreign Relations of the United States, not India.

I was there and then Pakistan ambassador Maliha Lodhi was there. Lodhi had an 18-page written document from Islamabad, which she read attacking the report.

Of the 18 pages, 16 pages were an attack on India and a few pages were an attack on the CFR. My presentation was not even 10 minutes.

Whenever you discuss something which is hot and current, Pakistan seems to be winning. Why is it so?

What happens is if a tournament goes on for a year, then the first round, second round, third round, takes place. After each preliminary round it seems Pakistan is winning.

But they will fail miserably by the semi-final and final. So if you throw your mind back and see the Pakistani victories -- so-called victories -- five years ago, they will appear to you as failures today.

India doesn't mind. We have to stop viewing the problems in Pakistan from purely an India-Pakistan prism. You have to see the overall conditions.

Pakistan has resources, they have natural gas, they are sitting in a very key position. If they had good trade relations with India, they could have been the doorway to Central Asia.

They would have gained tremendously through trade by road; they would have been a partner in dealing with the huge demand which is there in the Gulf countries.

So the amount they have paid for their main objective is not only to get equal to India, but also to get even with India. These are very expensive objectives.

So my point is: Their vision is flawed and it brings me no joy that they will pay a very heavy price for it. I don't want them to pay such a heavy price.

The fact is that they will continue to trouble India, and the more they trouble India, the more it will appear that Indian policies are failing.

Everybody in India feels how can you let them get away with this or get away with that, these are all rational responses, I have nothing to say.

Every initiative which is taken -- whether by Rajiv Gandhi or Atal Bihari Vajpayee or Dr Manmohan Singh -- somewhere down the line, the people who are controlling Pakistan are not prepared that any initiative taken by the Indian leadership may be allowed to succeed.

Now if that seems to be an integral part of Pakistan's foreign policy, where is the question of the Indian State achieving any success in India-Pakistan relations?

Sir, coming back to the recent incident on the border, what do you think happened?

What should be India's right response on this issue, and what should the people be told by the Government of India?

It is a very important issue. Politically and in terms of public opinion, it is a very difficult issue.

At a humanitarian level, it is a most disgusting affair. What we forget is that in international circles the image of Pakistan has gone down.

They have annoyed us tremendously. They feel they have been able to show that we can do this to Indian soldiers and there is nothing you can do about it.

People on our side feel we should give them the same, if not more, in return.

But a very essential point is being missed. Whoever did it, from the Pakistani side, caused great harm to the image of Pakistan.

It has shown that the Pakistan army is a dishonourable bunch of people. So look at the cost they have incurred.

You know, for political reasons, US generals call Pakistani generals by their first names and they are available on the phone and they ask about the health of each other's wives and so on. But what is this worth?

If you ask an average American or an average American officer, the way they view the Indian Army is at a much higher level.

They may find the Pakistani general staff more useful or good guys to do business with, but when it comes to military honour, the prestige of the Indian soldier and the Pakistani soldier, there is a world of difference.

What (Pakistan army chief) General Ashfaq Kayani has to realise is that what he has allowed his soldiers to do and then coercing this lady (Pakistan Foreign Minister Hina Rabbani Khar) to defend them in public is not a great victory.

They continue to be in a state of denial, that they have not done it. People know what is going on. People know what depths they can go to.

Sometimes the questions and answers from the Indian side appear as if we aim to dismantle Pakistan, that it is a great achievement for India if Pakistan's rate of growth is less and all that.

We should rise above that.

In the long run, a poor or disturbed Pakistan is not in our interest.

I don't think the majority opinion in India wishes Pakistan any harm. But at the same time, the point is when these incidents take place, of course, public anger turns intense.

It is also not only anger, but a lot of disappointment that despite so many moves and initiatives taken by the Indian prime minister, this is the result.

But one thing I am quite sure. Pakistan's civilian government may defend this kind of nonsense, but they are not happy with it. Certainly they have not sanctioned it.

I am doubtful if the Pakistani general staff gave such an order. But the collusion is surely there.

So a denial by the Pakistani army leadership is not a good thing. If they have not punished the perpetrators, they are causing themselves more harm than they have caused by beheading the Indian soldier.

The Pakistan army has reported that the Indian Army has done beheadings too. So what is going on?

On one side there is a parallel peace process, and on the other side both armies hurl allegations at each other.

Incidents along the Line of Control, where armies face each other, a few metres apart, cannot be controlled and monitored from Islamabad and New Delhi.

As far as the Indian side is concerned, I can tell you that if something happens, or retaliatory fire takes place, the superiors are not involved.

It is not the policy of the State to violate the ceasefire.

It is not the policy of the Indian Army, it is not the policy of the core commander, it is not the policy of the divisional commander, or the brigadier or even the battalion heads.

Now these things happen in pickets, and across the border, on some shouting, some crackling, retaliatory fire occurs and people die.

Now the beheading is an afterthought from the Pakistani side because they declared that in the exchange of fire, one Pakistani soldier died. They never said he was beheaded.

It is very odd that once the beheaded body is found on the Indian side, they are making this claim.

Have they got a photograph even? In any case, there is no cremation on the Pakistani side, so where is the body?

For an Indian soldier to indulge in this kind of thing (beheading), at least I have not heard so far.

If it is, it will be of a most exceptional order. So I don't give much weight to it.

As someone dealing with national security, you have seen very closely how the India-Pakistan bilateral peace process is being conducted.

Can you tell me what the substance of it is?

People have to live together in close proximity, with Pakistan it is as close as you can get.

Because it is not only that there are a number of divided families and even those who are not divided, families can easily communicate with each other, you speak the same language and so on and we share a common history. So you can't be more inter-connected than that.

Now having said that, there is a general desire to normalise and improve relations to take full advantage of cultural ties, trade ties, potential for economic advancement and cooperation.

The Government of India, I feel, has been trying in every which way to expand the area of cooperation and also to get some depth in the relationship.

The difficulty arises because on the Pakistani side, the government leadership does not control defence and foreign policy in the neighbourhood.

But that's an old story!

But it's a continuing story, what can I do?

Former Cabinet secretary Naresh Chandra's interview on the faceoff with Pakistan continues:

I have dwelt on Siachen, I have dwelt on the Indus water dispute issues, I have dwelt on Sir Creek, we can persuade people up to a point, but then we hit a wall.

I know at that time Ghulam Ishaq Khan was president, and a very powerful one. But, the establishment decided there cannot be and there shall not be an agreement with India.

Now once the president gives this directive to his secretaries, what can be done by the India side? What we can do?

Should we ask the Pakistani delegation what can we do for you? They will say do five things and will you concede it just to make a success of our bilateral talks?

That is not the way international relations are conducted. I know this is the old story, but I can tell you this is the current story, and this story that will prevail ten years from now.

You have been chairman of the National Security Board. I want a clear answer. Sixty-seven years have passed, what are the civil governments on both sides and the armies doing?

What is happening in the peace process? What is the crux of the matter?

The fact that a problem has prevailed for 67 years, it is not something that bureaucrats can control or direct, or the political leadership on our side.

It depends on the concessions you can give, consistent with your national interests.

There comes a time when you feel that to go beyond this point, in accommodating a neighbour or an adversary, if you are compromising the national interest of the people whose destiny is in your hands, you cannot betray that.