NEW DELHI, Aug 31: India's National Security Adviser Jyotindra Nath Dixit urged Pakistan on Tuesday to see the Kashmir dispute as an issue to be resolved but not the one that should be allowed to hold their 1.3 billion peoples hostage to it.

"If you ask for a glass of water, they will say first solve the Kashmir problem. That is the kind of psyche which affects us," Mr Dixit said. "Unless this is overcome then the rest will become theatre. We have to consciously, as people take note of these predicaments, devise ways to transcend them."

He was speaking to reporters on the margins of a regional conference on Saarc: "The post-Islamabad Challenges". "Kashmir is an important issue to be resolved between India and Pakistan. But its resolution should not hold 1.3 billion people (of the Subcontinent) hostage," he added.

Mr Dixit said the two countries should further economic relations to exploit the immense potential in this sphere. He said 'prejudices' remained a hurdle in movement of the regional countries towards cooperation at government-level.

"Time has come for moving forward with conviction and sense of clarity on what is good for us," he said. India had greater responsibility, he said, but it could be meaningful only if there was a response to it.