For the second consecutive day, Gujarat Chief Minister Narendra Modi [Images] and Prime Minister Manmohan Singh [Images] on Thursday sharply differed on a key issue as they voiced their views on what led to terrorism.

Dr Singh said extremism spawned from lack of development, but Modi said terrorism is flourishing not because of economic poverty.

They were speaking at the Chief Ministers Conference on Internal Security.

On Wednesday, Dr Singh and Modi clashed after the chief minister alleged that the United Progressive Alliance government indulged in communal budgeting, a charge denied by the prime minister.

"A large proportion of recruits to extremist groups come from deprived or marginalised backgrounds or from regions which somehow seem unaffected by the vibrant growth in many parts of the country," Dr Singh said.

"I notice that in many cases, internal security problems arise out of uneven development and we also need to address this issue if we are to make any long term headway in combating extremist elements," he added.

In Modi's view, "Terrorism is a problem of an ideology and attitude towards life of intolerance."

As if to justify that terrorism is not nourishing because of economic poverty, Modi argued that Punjab, a prosperous state, was also affected by it.

Modi also demanded that Centre bring out a white paper on terrorism as "the government's policy to deal with such issues was very ambiguous".

Inaugurating the CMs conference, the prime minister said often the lack of development and the lack of any prospects for improving one's lot provide a fertile ground for extreme ideologies.