Despite of all the bluster by some Indians Politicians on exhibit, most people in the know are quite sane. That's why there have been no large scale confrontations initiated by India even after some provocation. The cold and hard fact of the matter is "Deterrence Works."
This has led to feeling of impotency and inadequacy on Indian side where some think having X times bigger than Pakistan and have Y times better weapons would somehow help them cover up their deficiencies hence the large military budget of India which we really can't afford. It's a case of misplaced priorities.
Now I am a proud patriotic Indian and am contributing directly to betterment of India than legions of dumb sheep you see populating the twitter and other internet forums but I don't want my country to suffer as it does when having Hyper-expensive foreign jets are a higher priority then building schools and hospitals.
What can India do when God Forbid we have another Mumbai 26/11 or Kandhar Hijacking ?
The sad truth is nothing, as any military aggression will be quickly countered by Pakistan by tactical nukes. They have the capacity and it would be a folly to assume they won't use it. End result would be massive loss of life and no tangible gains.
The only option two options for India and Pakistan:
1. Remain in a perpetual state of cold war with no change of status-quo on Kashmir. Spend ton of money on defense while more than half of your population lives a sub-human life.
2. Negotiate and solve the Kashmir issue whatever it takes. Finalizing the LOC as IB is the most feasible and reasonable option. All we need are two Brave and Patriotic leaders on both sides who would have courage to do what's best for their country. After that we can be friends or go our separate ways without having to watch our backs.
Mr. Modi is an intelligent man and now is the time when he has maximum political capital to take a courageous step before he looses the political capital which would inevitably happen. I wish that he sits on the table with Mr. Shariff and Pakistan Army both. Pakistan would greatly appreciate this as less tension with India would leave it free to deal with TTP and other extremists it is fighting
The problem with the Y times is that the nuclear weapons ruin any and all calculations into that matrix. The only possibility is the removal or negation of Pakistan's nukes and that too is a very far fetched diplomatic manoeuvre that would require a nuclear disaster in a major power and then an attack on Pakistan by a third party. All flights of fancy so far.
In the event that there is another terror attack does take place, the best that can be hoped for is an airstrike and that too did not play out well in the aftermath of 26/11. Since the relative superiority of the IAF only works in an all out conflict and in a limited strike it could very well be outnumbered and possibly out gunned as well by the PAF on its own turf.
Even if that does go through, what guarantees that there will not be a retaliatory strike launched that starts off a greater tit for it.
Any assumption that just an aerial conflict or naval blockade will work is based on sheer idiocy that assumed that it will not give a good excuse for Pakistan to launch pre-emptive offensives into India or resort to nuclear blackmail to negate it.
That leaves those two options and the third.
3. Fuel social unrest in Pakistan and pay back the terror in the same coin whilst keeping pressure on the eastern front via regular skirmishes and shelling(which the IA can afford). In a warmer "cold war" if you will in the hope that Pakistanis economy and social suffering causes a major collapse or change that at the very least focuses the extremism and terror inward rather than toward India. This has the danger of triggering the clause laid ambiguous in Pakistani doctrine that a serious destabilization of Pakistan by India will trigger a nuclear war..but the greyness in that leaves it a safe bet for now.
For now, it seems that this is the policy being followed. Regardless of possible ramifications later, there is little indication that there is any intent to resolve issues by either side by compromising their demands.