Modi pledges $12bn to 'fulfil dreams' of Indian Kashmir

Prime Minister Narendra Modi on Saturday announced $12 billion in financial assistance to Indian-administered Kashmir, more than a year after deadly floods devastated parts of the disputed Himalayan region.

Speaking in the main city of Srinagar amid intense security, the Hindu nationalist leader said he wished to take India's only Muslim-majority state back to its "former glory".

Modi stressed the need to create jobs for young people, boost tourism and infrastructure, and close a gaping digital divide in the conflict-wracked region, where many do not have access to the Internet.

"To fulfil these dreams, the Indian government is announcing an 80,000 crore rupee ($12.1 billion) package to Jammu and Kashmir," Modi told a cheering crowd at a public rally in Srinagar, as authorities imposed a curfew for the second day running.

"My heart wants this money to be spent to change your fortunes, to give strength to your youth, to build a modern Kashmir," he said as some in the audience jumped up and down, waving their arms with joy.

"Not only are Delhi's funds yours, but so is its heart."

Srinagar was hardest hit after the rain-swollen River Jhelum burst its banks in September 2014 leaving thousands stranded.

The floods killed 300 people and caused an estimated $16 billion worth of damage, with thousands of homes and large tracts of farmland ruined, according to official data.

Most Indian prime ministers have announced economic packages for Kashmir in the past, with some seeking political engagement with separatists in the restive region.

"I hope he (Modi) will stop all the violence here," said Bashir Ahmed, a resident of Srinagar who had come to listen to the prime minister along with his family.

But Modi steered clear of politics in his speech, prompting opposition leader Omar Abdullah to react sharply.

"PM Modi has made the same mistake of weighing the Kashmir issue in Rupees & Paise!!!!," Abdullah, the former chief minister of the state tweeted.

- 'Every time we suffer' -

Security was beefed up ahead of Modi's visit, with the region already tense following incidents of religious intolerance and attacks on minorities in many parts of India.

Authorities imposed a near-lockdown and suspended mobile Internet services -- common during high-profile visits to the volatile region, which is divided between India and Pakistan but claimed by both in its entirety.

Hundreds of separatist activists were arrested ahead of the visit, with leaders confined to their homes to prevent them from holding a protest march against Modi's rally.

"Modi's visit and the economic package will not change anything, like in the past," top separatist leader Syed Ali Geelani told reporters outside his residence, surrounded by police to prevent him from leaving.

Another separatist leader, Mirwaiz Umar Farooq, who has taken part in negotiations with New Delhi in the past, said in a statement after the rally that the government should "display political wisdom and courage for permanent resolution of the dispute".

A separatist insurgency against Indian rule and India's counter-insurgency campaign has left tens of thousands dead since 1989, mostly civilians.

As political workers ferried people in buses and taxis to the venue, a distressed pregnant woman, accompanied by an elderly woman, walked past government forces towards a maternity hospital.

"Every time an Indian VIP visits here we have to suffer," the lady said, without giving her name.

Source: AFP