PUNJAB MOVES MAY BOOST GANDHI

The freeing of alleged Sikh militants has cleared a barrier in the way of Rajiv Gandhi's bid to end separatist violence in Punjab. It could boost his election chances, analysts here say. More than 100 Sikhs held since mid-1984 were released earlier this week - a move that marks the first step to solving the Punjab problem, says opposition leader Lal Kishan Advani. ``If he [Gandhi] solves it, he can win the elections. But it is a big `if,''' Mr. Advani says.

Prime Minister Gandhi must tread a narrow line between offering concessions to the Sikhs to wean them from militancy and not appearing politically weak to India's Hindu majority, political analysts say.

The elections, due by year's end, are expected to be a close competition between Gandhi's Congress (I) party and a newly formed seven-party alliance.

Gandhi has also agreed to withdraw special powers given to security forces to search, arrest, and detain suspected extremists. A special committee will reportedly rule on who should be released among more than 3,000 Sikh youths held by security forces. A danger is that some freed prisoners might join the extremists and step up violence, sources say.