Mufti Mohammed Sayeed's healing touch policy could become the first major casualty of Nandimarg massacre near Shopian in Pulwama district, according to sources in the central government observers who visited the massacre site on Monday.

"Ever since Mufti took over, the security forces have slowed down. Number of anti-militancy operations has come down. And that lull may have emboldened the terrorists to undertake such daring strikes," a senior officer involved in Kashmir said.

The officer said senior officers from Home Ministry under Special Secretary A K Bhandari have said that the massacre was a result of the new security scenario emerging in the wake of the healing touch policy.

A senior army officer said, "There definitely was a drop in our aggressiveness. But I don't know if it has contributed these killings."

He said the army would step up its operations in the wake of the massacre, but expressed fears that any aggressive military action could also lead to 'untoward' incidents that may anger the local population.

"That could alienate the locals who are now slowly beginning to trust the state government," the army officer warned.

Deputy Prime Minister Lal Kishenchand Advani on his return from Kashmir would brief the Cabinet Committee on Security on his assessment of the situation.

If he agrees with the conclusion of the home ministry team then Mufti government could be advised to 'go slow' on its peace initiatives.

There are other options, which are being discussed in New Delhi. Some officials indicate that the healing touch policy could still continue while the security forces step up their operations.

The other option is asking Mufti to abandon the healing touch policy, which includes the release of militants.

If Mufti government decides to be defiant, as a first step the Centre would then withdraw its nominees from the screening committee that decides release of militants. But there are no indications that Mufti would want to take on the Centre at this point of time.

Many in the army believe the scale of the massacre or the widespread terror being created by foreign terrorists are no reasons for abandoning the healing touch policy.

In fact, army sources admit that there is a growing opinion favouring peace in the Kashmir valley. Army chief General N C Vij has openly praised Mufti's initiatives.

Meanwhile, India has told the United States and Britain that Pakistan President Pervez Musharraf is using the Iraqi war as a cover to assure the Pakistani fundamentalists that he hasn't abandoned the traditional policy on Kashmir.

External Affairs Minister Yashwant Sinha conveyed the assessment to US Secretary Colin Powell and British Foreign Secretary Jack Straw on Monday when they called on him.

Sinha told the two leaders that the Pakistani tactics could upset the resurgent hope for peace since the state assembly elections in September last year.