Khatanas resignation from the PDP came on the second death anniversary of party founder Mufti Mohammad Sayeed.
"I and my workers announce our resignation from the basic membership of the PDP," he told reporters here.
Khatana alleged the PDP had drifted off the path shown by Sayeed and had become a hub of corrupt and insensitive people.
Accompanied by around 60 workers, Khatana said he had joined the party on the invitation of Sayeed in 2014 and wanted to address the problems of Gujjars and Bakerwals.
"A few leaders, who lost elections but are closer to the power corridors, are running the party on whims and fancies and indulging in open loot through various means," he alleged.
He demanded a National Investigation Agency (NIA) probe into the assets of ministers and their relatives.
Khatana had on December 27 resigned as vice chairman of the Advisory Board for Development of Gujjars and Bakerwals.
He enjoyed the status of Minister of State (MoS) in the government.
Referring to his resignation from the board, he said his mission was to serve the deprived Gujjar and Bakerwal community but he found that the board was a "mere eyewash as vice chairman could do nothing to mitigate their problems.
He accused Tribal Affairs Minister Choudhary Zulfkar Ali of "amassing huge wealth"and asked Chief Minister Mehbooba Mufti to order a probe against him.
Khatana alleged that the Gujjar-Bakerwal community was being denied job opportunities and benefits of reservation and promotions.
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