The only feasible solution is converting the existing LoC/AGPL into a formally recognized international border.
I agree with it . This is the only solution if we do not believe in miracle and both the states are rational.
But here Pakistani establishment (not Govt) is duping the citizens telling that a miracle may happen and in no way this establishment is acting rationally. But Why? May be for following reasons-
a. If this conflict is resolved, then army's importance will be reduced drastically. Defence budget will be reduced drastically which they do not want. If this is the case then from Pakistan point of view , Kashmir conflict is the biggest " financial scam" in the nation which is syphoning development budget to non productive areas and army boss`s pockets
b. If this conflict is abolished then at one point of time an India-Pakistan confederation may form for financial justification which may reduce your defence budget further.
Pakistani establishment is enjoying king's life, there is no reason that they will forego that voluntarily. You are riding on a tiger's back and do not know how to get down.
So, until Pakistan undergoes big uprising against army, your proposal will never be accepted . If civilian Govt. was the decision maker, this conflict would have been solved much earlier. Your civilian Govt is answerable for low development to the people but has to power to resolve conflicts and reduce unnecessary defence budget--this is their greatest tragedy and the same is greatest luxury to your army ( not directly answerable to people of Pakistan)
( NB : I am equally concerned on unnecessary Indian defence budget. If conflict with Pak & China is resolved, our defence budget will also be reduced. Only relief in our case is Indian army ( not directly answerable to people) here is not the decision maker)