Apr 11 (Reuters): India's nationalist government plans to resettle tens of thousands of Hindus in three new townships in Muslim-dominated Kashmir, setting up a confrontation with separatists who say it is an Israel-style policy of creating settlements in occupied territory.

Many Kashmiri Hindus, or Pandits, also say they are not in favour of the plan.

Between 200,000 to 300,000 Hindus are estimated to have fled Kashmir after an armed revolt against New Delhi's rule erupted in 1989 and Prime Minister Narendra Modi's Bharatiya Janata Party (BJP) has long vowed to return them to their homes.

Just a month ago, the BJP took control of the Kashmir government in alliance with a regional partner - the first time the Hindu nationalist party has been in power in the state.
This week, the state government unveiled a plan to set up self-contained, heavily guarded colonies for Hindus who fled their homes and are now living elsewhere in India or overseas.

Kashmir is divided between Hindu-majority India and Islamic Pakistan and the nuclear-armed neighbours have gone to war two times over the territory since independence in 1947. A third confrontation in 1999 stopped short of a formal war.

Around 100,000 people have been killed in the separatist revolt that India says is financed and aided by Pakistan. Pakistan denies the allegation, saying it only gives moral and diplomatic support for Kashmiri people in their struggle for self determination.

But after years of anti-insurgency operations by tens of thousands of Indian soldiers and with Pakistan embroiled in tackling militant groups at home, violence has ebbed in Kashmir.

Federal Home Minister Rajnath Singh held talks with Jammu and Kashmir Chief Minister Mufti Mohammad Sayeed this week to discuss the party's commitment to rehabilitate Hindus in Kashmir, the government said.

"The chief minister assured the union home minister that the state government will acquire and provide land at the earliest for composite townships in the valley," the home ministry said in a statement.

Under the plan, the townships will be built on land acquired from farmers and will have schools, shopping malls, hospitals and playgrounds, the government said. No details about how much land will be acquired and when any construction will start were immediately available.

Kashmir's main separatist alliance said the BJP was using the plight of the displaced people to further an agenda of ending Kashmir's special status. Under current laws, non-Kashmiris are not allowed to own land in the state.

"The issue of Pandits is being used to create a state within the state on the lines of Israel," said Syed Ali Shah Geelani, a top leader of the All Parties Hurriyat Conference, an umbrella organisation of separatist political and religious groups.

He said the displaced Hindus must be brought back to Kashmir but not to ghettos which would only sharpen divisions in Kashmiri society. The separatists held a street protest on Friday after prayers and have called for a shutdown across the Kashmir Valley on Saturday.

Many Kashmiri Pandits said they were not sure about the government's plan to move them back.

"It will make Pandits vulnerable. Under such circumstances nobody will come back," said Sanjay Tickoo, president of a Kashmiri Pandit association. He accused the government of thrusting the plan on the Pandits.