Colombo, Nov 26 (IANS) India Friday signed a $416 million agreement for the construction of a railway line in Sri Lanka's northern region. The deal was clinched during a meeting between visiting Indian External Affairs Minister S.M. Krishna and Sri Lankan President Mahinda Rajapaksa.

Nadeem Panjetan, managing director of the Exim Bank of India, signed the agreement for the Indian side while Treasury Secretary P.B. Jayasundara signed for the Sri Lankan side, the Sri Lankan government said in its official website.

The construction of the rail line will be carried out in three segments, from Madhu to Talaimannar, Madawachchiya to Madhu and Omantai to Palaly.

India has also promised to build 50,000 homes for the internally displaced persons in Sri Lanka. Initially, 1,000 houses will be constructed in a cluster format on a land given by the government.

Krishna felicitated Rajapaksa on his assumption of office for the second term. The Indian minister is the first foreign dignitary to be received by the Sri Lankan president since he began his second term with 59 cabinet members Nov 22.

The two sides also agreed that Buddhist relics will be brought from India to Sri Lanka in May next year for the 2600th anniversary of the enlightenment of Lord Buddha.

Krishna will also inaugurate two Indian consulates in Jaffna in the north and in Rajapaksa's home district of Hambantota in the south of the country during his visit.

The Indian delegation included Foreign Secretary Nirupama Rao and Indian High Commissioner Ashok Kantha.

The Sri Lankan delegation included External Affairs Minister G.L. Peiris, External Affairs Secretary Romesh Jayasinghe, Treasury Secretary P.B. Jayasundara, Secretary to the President Lalith Weerathunga and Minister for Power and Energy, Champika Ranawaka.