His comments came amid protests by several organisations over the PDP-BJP coalition government's decision to compensate the family of Khalid Wani, who was killed in an "encounter" with the Army in Pulwama district on April 13 last year.
Singh said an FIR has been lodged and "whatever be the outcome of the probe, government will act accordingly".
"If it is proved that he was a terrorist as the FIR has been lodged, action would be taken as per that," he said replying to a question on giving compensation to Khalid's family.
Khalid's brother Hizbul Mujahideen commander Burhan Wani was killed by security forces on July 8, and his death had led to months-long protest in the Valley in which 86 people died.
Asked about the impact of Union government's move to demonetise old high-value currency notes on unrest in Kashmir, Singh said the exercise has "badly-hit" terrorism and 'hawala' transactions, which is believed to support the militancy.
"There is a dip in smuggling of weapons from Pakistan. They are frustrated by the demonetisation," he said.
He asked Hurriyat leaders and other separatists to think "positively" so that normalcy returns and added that shutdown by separatists is "causing loss to everyone," he said.
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