New Delhi, Dec. 3: The government is likely to pick the new heads of the Intelligence Bureau and the Research & Analysis Wing by mid-December.

The chief of external spy agency RAW, Rajinder Khanna, and his internal intelligence counterpart Dineshwar Sharma of the IB are due to retire on December 31.

Home ministry sources said the contenders for the coveted IB director's post included two of the agency's special directors, S.K. Sinha and Rajiv Jain, and Mumbai police commissioner Dattatray Padsalgikar.

"Sinha is an expert on Kashmir issues and counter-terrorism. He is a strong contender considering Prime Minister Narendra Modi's continuous focus on Kashmir and terror," a senior ministry official said.

Before being appointed Mumbai's top cop, Padsalgikar too was a special director in the IB.

Anil Kumar Dhasmana, a 1981-batch IPS officer, is among those short-listed to head the external spy wing.

"Dhasmana is a special secretary at the cabinet secretariat and is said to be the favourite," a government source said.

Officials said the government had initially thought of granting tenure extensions to Khanna and Sharma but later changed its mind.

"The stakes are high in the race for the two posts. Lobbying has already begun," a RAW official said.

"The Prime Minister remains the final authority in the selection. Considering the political situation and the threats from inside and outside, greater coordination is expected in the future between RAW and the IB," a senior IB official said.

A retired IPS official said that both agencies had performed competently in the recent past in cracking down on extremist networks in Kashmir and other parts of the country.

"But their professional rivalry is legendary too. They often resist sharing intelligence with each other. A political understanding is considered an absolute must for both the RAW chief and the IB chief," he said.

Referring to Friday's appointment of Gujarat-cadre IPS officer Rakesh Asthana as the interim CBI director, he said nothing could be said for sure given Modi's knack of pulling off surprises.

This is the first time in 10 years that the CBI lacks a full-time chief, although the government had begun the selection process five months ago.

Asthana, a 1984-batch IPS officer, had as inspector-general overseen the initial probe into the Godhra train fire that set off the 2002 Gujarat pogrom.

"Modiji loves to hand surprises and who knows whether he has Gujarat-cadre IPS officers in mind for the two intelligence posts," a North Block official said.