DATE=7/4/2000 TYPE=CORRESPONDENT REPORT TITLE=INDIA/KASHMIR (L-UPDATE) NUMBER=2-264051 BYLINE=ANJANA PASRICHA DATELINE=NEW DELHI CONTENT= INTRO: In India, the federal government has rejected a proposal to grant greater autonomy to the troubled state of Jammu and Kashmir. As Anjana Pasricha reports from New Delhi, the government says granting more autonomy to Kashmir will weaken India's national unity. TEXT: At a special meeting Tuesday, Prime Minister Atal Behari Vajpayee's cabinet unanimously rejected a resolution passed by the Jammu and Kashmir state assembly asking for wide autonomy for the insurgency- wracked state. The resolution had proposed limiting the federal government's authority in Jammu and Kashmir to finance, defense, foreign affairs and communications. It suggested that the state should have its own constitution, flag and prime minister, as it did before 1953. Home Minister Lal Krishna Advani says his government is not opposed to granting more powers to the states. But giving Kashmir the wide autonomy it has asked for will trigger similar demands from other states, he says, and weaken India's national integrity. /// ADVANI ACT /// After all, if we were to accept this, then it would certainly set in motion certain trends which are not conducive for national unity, and therefore it is that we emphasize that while we are in favor of devolution of powers to the state, we would not like to do anything which weakens the country's national fabric. /// END ACT /// Mr. Advani urged the Kashmir government to concentrate on ending the separatist insurgency and terrorism in the state. Rejection of the autonomy proposal will put the New Delhi government in confrontation with the National Conference party in Kashmir, which spearheaded the proposal. The National Conference has reacted angrily to the government's decision, calling it "unfortunate", and says it will press ahead with its demand. The party says autonomy is the only solution to the decade-long separatist insurgency in Kashmir, which has claimed more than 30-thousand lives. The central government's firm rejection of the autonomy proposal has come faster than expected. Earlier, Mr. Vajpayee had said it would be discussed within the framework of the Indian constitution. Mr. Advani had indicated it would be placed before Parliament, but this will not happen now. The resolution asking for more autonomy in Kashmir had been strongly opposed by national political parties, including the ruling Bharatiya Janata Party and the main opposition Congress Party. They fear granting Kashmir more autonomy will lead to the country's break-up. For different reasons, several separatist leaders in Kashmir have also opposed the proposal. They say regional autonomy will not satisfy the aspirations of people in the state. (Signed) NEB/AP/WTW 04-Jul-2000 09:58 AM EDT (04-Jul-2000 1358 UTC) NNNN Source: Voice of America .