He asserted that a "homeland" for itself was a right of the migrant community who, he said, have been reduced to the status of "minority" in the country and slammed the separatists for opposing the plan.
Kher said the project could be initiated with an area of "10 square km" and by building world class infrastructure in the selected area which he said could be a "model" for the country.
"Most of the Pandits are educated professionals who will settle there. I don't know who coined the word 'ghetto', some sick mind must have coined that. There is a difference between 'ghetto' and being asked to come and settle down in the same place," he said.
On being asked whether he would want the smart city to be marked exclusively for Pandits, he said, "To start off Kashmiri Pandits should settle there. Later other people can come in. We are not against the Muslims of the Valley."
"It would not be possible for the 3 per cent to mingle with the 97 per cent who drove us out and you can go back to an area where you have scarred memories. It's not a Hindu-Muslim issue," he said.
"This is not a mere demand. This is our right and it is a very right time that the Prime Minister and Home Minister have come up with the proposal. They should go ahead with the plan. Five-six people should not hold it in ransom," he said at a press conference here.