NEW DELHI, Nov 17: World Bank President James D. Wolfensohn on Wednesday lauded India's engagement with Pakistan over the Kashmir dispute and said New Delhi had a key role to play in global stability, peace and economic prosperity.

Mr Wolfensohn's remarks, at the start of a two-day visit here, are being seen as significant not only because the prime ministers of both countries are regarded as close to the World Bank, which in turn holds them in high esteem, but also because the two are to meet here early next week.

"India is more confident, more outward looking today," Mr Wolfensohn said. "It's looking to sign free trade agreements across the region. It's looking to China not as a political challenge but as a trading partner; it's looking to solve problems in Kashmir, with Pakistan."

"India is central to global stability, peace and economic prosperity. Its development is not just an issue for Indians but for the entire planet," he said in a special address on "India: Opportunity and Challenge in a Globalizing World".

Lauding the Congress-led government's agenda for governance for its commitment to address issues of poverty, Mr Wolfensohn said: "Its challenge now is the aggressive implementation of the programme and the unleashing of the country's entrepreneurship to make this happen."

A recurrent theme for Wolfensohn was the challenge of a "two-speed India". One is in the global fast lane of entrepreneurial talent and technological creativity, where Indian companies are becoming a global presence. In the other lane are the 600,000 villages where most of India's over 250 million poor people live on less than one dollar a day.