"I do not have any knowledge about setting up of a sainik colony in Kashmir. This is an issue being raised to mislead the people," Singh, who holds the Housing and Urban Development portfolio, told reporters at Salamabad Baramulla district.
Separatist groups have threatened to launch an agitation following media reports that the Centre has asked Jammu and Kashmir government to consider a proposal of setting up a sainik colony in the state for ex-military men.
On the return of Kashmiri Pandits to the valley, Singh said they are the sons of the soil and they should return.
"If there is a colony for them, there should be no problem with that. Other people can also live there ... Muslims, Sikhs and Buddhists can also live there," he added.
The Deputy Chief Minister said even return of Kashmiri Pandits was made an issue with the aim of "disturbing peace" and misleading the people.
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