She made the comment during the motion of thanks to the governor's address in the state Legislative Council.
"SAARC countries should get united and make J-K a model state. They should establish banks, trade, industries and universities. It should become an example.
"Thereshould be one currency on the lines of the European Union (EU). There should be a EUtrade model," she said.
Welcoming the recent meeting of the national security advisors of India and Pakistan in Thailand, Mehbooba said she wishes for normalisation of relations between the two countries and that the state become a bridge of peace, faith and trust between India and Pakistan.
"Let us explore opportunities of Tashkant, Kashgar, Iran which have been historic routes through which Islam came to Kashmir.
"It was this tolerant Islam which groomed us to think on rational and humanitarian lines while deciding our fate in 1947," the chief minister said.
The state should become the gateway to central Asia. It should start from Jammu, then Kashmir and finally end in Ladakh, Mehbooba suggested.
On Indo-Pak talks and better relations, the chief minister said, "There is no way out without talks with Pakistan. If you have to restore peace and end bloodshed in the state, you will have to better relations between India and Pakistan."
"We have been saying that 200 militants were killed and they (Pakistan) will send another 200 militants. Infiltration is on. During prime minister Atal Bihari Vajpayee's time, Pervez Musharraf had promised to stop infiltration. But, infiltration is still on," she said.
Pakistan has to understand that that Jammu and Kashmir has written its future and the only thing which is now possible is that the state can become a peace bridge, she said.
"The problem (in Kashmir) will be resolved if there will be good relations. Our problem will be resolved if J-K becomes a peace bridge between India and Pakistan instead of a battle ground
"Whatever we have to get, we will get it from the country (India). We ask Pakistan to stop infiltration and stop sending guns. Let us live together," Mehbooba said.
To empower people at the grass root, she said her government intends to hold elections to panchayats and urban local local bodies, and put in place a three tier governance apparatus.
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