NEW DELHI - INDIA on Monday offered US$100 million (S$146 million) for the tens of thousands of Tamil civilians displaced by conflict in Sri Lanka.

'I propose to allocate five billion rupees for the rehabilitation of the internally displaced people and the reconstruction of the northern and eastern areas of Sri Lanka,' Finance Minister Pranab Mukherjee said in his budget speech to parliament.

Nearly 300,000 civilians fled their homes in the final stages of the Sri Lankan military's offensive against the Liberation Tigers of Tamil Eelam separatist force.

They are currently being housed in temporary shelters.

Observers said Mr Mukherjee's offer was aimed at appeasing his government's regional Tamil allies.

India is home to millions of Tamils in southern Tamil Nadu state, which is separated by a narrow strip of sea from Sri Lanka.