New Delhi  - Indian Prime Minister Manmohan Singh on Saturday pledged 100 billion rupees (2.3 billion dollars) over the next five years as part of economic engagement with Bhutan, news reports said.

Singh, who became the first international leader to visit Bhutan after it entered the club of democratic nations in March, made the offer before concluding his two-day visit to the Himalayan nation, the IANS news agency reported.

Addressing Bhutan's newly elected national assembly in Thimpu, Singh pointed out that the Indian market offered vast opportunities for Bhutan's agriculture, industry and services sectors.

"We will work towards the further improvement of connectivity between our two countries so that our borders become the gateways for mutually beneficial undertakings," Singh said in his speech.

During his speech, Singh said India would develop Bhutan's hydro- power potential and double its import of electricity from the country to 10,000 megawatts by 2020.

Singh also announced that India would soon begin construction of its first ever rail link with Bhutan between the border towns of Hashimara in India's West Bengal and Phuentsholing in Bhutan.

"As we draw all these threads together, our bilateral economic engagement with Bhutan over the next five years will be of the order of 100 billion rupees," Singh said later in his speech.

Singh also said that India was ready to assist in making South Asia more secure and assured that the country would stand by Bhutan as a factor of stability and support.

"India desires to see a South Asia which is at peace with itself. We wish to contribute to ever widening circles of security, peace and prosperity in our region," Singh said.

"It is with this objective that we look toward to working further with Bhutan in both the bilateral and regional context. A Bhutan that is sovereign, prosperous and secure is central to our vision for the future," he added.

Singh stressed the evolution of a development and economic cooperation strategy and enhancing collaboration with Bhutan in areas of water security and environment.

Following his address, Singh dedicated the 1,020 MW Tala hydropower project - built with Indian assistance - to Bhutan and laid the foundation of the another major power project at Punatsangchhu which will generate 1,095 MW. (dpa)