The BBC has done an analysis of the Kashmir problem and has listed possible solutions for the same. Kashmir problem has been pulling back India and to a certain extent Pakistan for quite some time now. A resolution of the same will allow both countries to concentrate more on thier economic and social development. Currently the only country having any advantage with the Kashmir issue is China. Kashmir issue will keep both India and Pakistan occupied, while China can work on becoming the superpower of the region.
In the BBC analysis, it was interesting to find that the chinese occupied territory of Jammu and Kashmir does not come into picture at all. Neither India nor Pakistan brings up chinese occupied territory in any statement/discussion/rhetoric about Kashmir. Even the kashmiri’s who want Jammu and Kashmir as an Independent country are not interested in that territory! The plain truth is no one wants to offend China, who are militarily strong. (High time India modernised their army)
Another interesting point to note in the analysis is that nowhere was the possible solution of converting Actual Line of Control to International border discussed. I personally believe that it is the right solution to resolve the kashmir issue. Proposing An independent kashmir or Jammu and Kashmir belonging to either India or Pakistan, as a solution for the issue is fanciful thinking, all of which practically not implementable.
With the conversion of Actual Line of Control to International border, India can in effect abolish all the special staus given to Kashmir and integrate it completely to Indian mainland. The threat of terrorism will still exist, and voices will be raised, but in the long run it will be beneficial to India. Unfortunately this could only be achieved by bullying/coaxing Pakistan to sign on the dotted lines.