The issue of Kashmir is never going to be solved if the status quo is maintained. Now that Kashmir in Indian hands is it's own union territory, the time has come for something new, something bold, something revolutionary to kickstart the reconciliation between India, Pakistan and the Kashmiri people (both Muslims and Pandits)
To start with Kashmir should be declared an autonomous region with a council of 7 to manage internal affairs. For a period of 25 to 50 years, external defence and Pandit resettlement will be under the mandate of the UNPKF.
Out of the council of 7, 2 reps will be from India and Pakistan each, 1 will be a local kashmiri, 1 will be a Kashmiri Pandit while 1 will be rotated on a 5 year basis from the UNSC so that there is never a gridlock on critical decisions.
India should be responsible for atleast 60% of the initial financial support with Pakistan providing the remaining for the Kashmiri people to get on their feet in addition to helping them build trade and diplomatic ties with the rest of the world.
In 50 years the council of 7 will be required to initiate proceedings to hold a plebiscite in accordance with the wishes of the Kashmiri muslims and pandits on whether they prefer the autonomous arrangement or freedom if they prefer self sufficiency or joining with either India or Pakistan.
This is also a way for both countries to do some good rather than continuing a slugfest over the true causes of this conflict: Pride and water.