Sources close to External Affairs Minister Kunwar Natwar Singh said the United Progressive Alliance government of Manmohan Singh was committed to continuing the confidence-building measures and peace talks that had begin under the National Democratic Alliance government of A B Vajpayee.
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The government believes that Musharraf was sincere about the talks and recent events such as Pakistan complaining to the World Bank about the Baglighar dam project or the two incidents of firing across the Line of Control should be seen in isolation.
The source said the government believed that the recent firing across the border was the work of elements in Pakistan opposed to the confidence building measures and peace talks. He said India had deliberately chosen not to retaliate to the firing so as not to strengthen the anti-peace lobby in Pakistan.
"The talks will continue," said the source.
"Natwar Singh will be meeting [Pakistan Foreign Minister Khurshid] Kasuri at Dhaka during the South Asian Association for Regional Cooperation summit and Manmohan Singh will meet Pakistani Prime Minister Shaukat Aziz too."
But doubts have been raised about whether the SAARC summit in Dhaka would be held as per schedule
The Ministry of External Affairs spokesperson said that a high-level security team would be dispatched from India today to make a fresh assessment of the situation on the ground.
There are concerns that the general strike called by the opposition Awami League, in protest against the killing of its party leader, might force the SAARC summit to be postponed or cancelled.
But Natwar Singh is also due to visit Pakistan soon, and the source reiterated that India remained committed to the peace talks.
However, he admitted that the Indian government was a trifle baffled by Islamabad's complaint to the World Bank against the Indian project of building a dam on the Chenab river in Jammu and Kashmir, whose waters flow into Pakistan.
The World Bank has asked Pakistan for all relevant documents on the matter. As per the India-Pakistan agreement, in case of a dispute over the Baglighar project, third party mediation has to be sought by both sides.
Since India has not yet sought the Bank's intervention, Islamabad approaching the World Bank should not be seen as the latter mediating on the subject, the source said.
New Delhi has tabled a series of proposals to take the current confidence-building measures to a higher level, he said.
For instance, India has said it is willing to start a bus service between Srinagar and Muzaffarabad in Pakistani-occupied Kashmir sometime soon.
It has also said that it is in a position to start rail service between Kokhrajar in Rajasthan and Munnabao in Sindh by October 2. However, Pakistan has so far declined India's offer of technical assistance to revive the rail lines that had fallen into disuse after the 1965 war, the source said.