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DATE=8/14/1999 TYPE=CORRESPONDENT REPORT TITLE=INDIA/PAKISTAN (L) NUMBER=2-252792 BYLINE=ANJANA PASRICHA DATELINE=NEW DELHI CONTENT= VOICED AT: INTRO: India has offered to release eight Pakistani prisoners of war captured during the recent fighting in Kashmir. Anjana Pasricha reports from New Delhi, the offer comes as tensions have increased between the two countries following two air clashes, earlier this week. Text: India called its offer to release the prisoners of war a gesture of goodwill. The eight prisoners of war were captured during the eight weeks of fighting in Kashmir this summer. India's foreign ministry spokesman says the gesture has nothing to do with easing tensions that have resurfaced following this week's air clashes. He says it has been made to coincide with Pakistan's Independence Day of August 14th. But observers say the decision to release the prisoners of war is a signal to Western nations India is interested in lowering tensions. It also is seen as an attempt to recover some of the diplomatic goodwill New Delhi might have lost after it shot down a Pakistani naval aircraft, Tuesday. India said the aircraft intruded deep into Indian territory, in violation of a 1991 agreement between the two countries. Pakistan denied the incursion. Analysts say New Delhi also hopes the release will force Islamabad to admit its troops were involved in armed incursions by Muslim guerrillas in Himalayan territory. Pakistan denies New Delhi's assertion most of the intruders were Pakistani soldiers. Meanwhile, Indian officials are stressing New Delhi intends to exercise restraint in its policy toward Islamabad, despite the latest crisis. The statements come after several countries urged both Pakistan and New Delhi to cool heightened tensions. India's foreign ministry spokesman, Raminder Jassal, says Islamabad must respect bilateral agreements between the two countries. ///JASSAL ACTUALITY/// We do quite understand that restraint should be exercised but the counsel of restraint indeed should be addressed to a party that has violated bilateral commitments and confidence building measures. ///END ACTUALITY/// India says it wants a dialogue with Pakistan, but will not tolerate what it terms as provocations. Several countries are urging both nations to hold talks to lower tensions. But India faces general elections next month and a dialogue is unlikely to get underway until a new government comes to power in mid-October. (signed) Neb / wd / wd 14-Aug-1999 06:56 AM LOC (14-Aug-1999 1056 UTC) NNNN Source: Voice of America .