The major source and symbol of their 52-year old conflict is Kashmir. In 1989-90, Indian Kashmir saw the start of a major insurgency that has waxed and waned at the cost of some 20,000 lives so far. India argues that Pakistan has concluded that it is less costly, safer and more effective to wage a proxy guerrilla war than either to fight a real war or engage in a genuine diplomatic dialogue.

The biggest obstacle to peace in Kashmir is not an insurgency armed and financed by Islamabad, but a policy vacuum in Delhi. The forcible occupation of Kashmir has left several harmful legacies for India. Its democratic institutions have been corrupted by repeated rigging of votes in Kashmir and a refusal by Delhi to accept the province being ruled by other than a pliant government. Democratic principles have been eroded by an increasingly heavier presence of the coercive apparatus of the state, preventive detention without trial and allegations that the guardians of the rule of law have themselves become brutal violators of the law in their dealings with ordinary citizens.

The meaning and operation of federalism have been undermined as well. Authorities in Delhi have shown little respect for the wishes of the people of Kashmir. Moreover, by giving special status to Kashmir, the constitution discriminated against other states and fueled demands for a matching status. Last month, the central government rejected the provincial government's call for a fully autonomous status for Kashmir.

The effort to integrate Kashmir into the Indian mainstream has also been a costly financial drain. The conflict is the main impediment to both countries reducing defense expenditures and converting defense industries to more productive civilian industries. A high defense outlay depresses economic growth directly by diverting investment funds and indirectly by diverting research and development skills and efforts. This is particularly true for developing countries whose need for external inputs like capital, trade and technology is usurped by military outlays.

The moral, political, economic and international costs of India's Kashmir policy have been only too apparent. For the sake of their national interests, India and Pakistan must find a solution to Kashmir, instead of holding its national security hostage for the sake of the disputed territory. A resolution of the Kashmir conflict followed by greater attention to economic and social development would bring both countries greater and more genuine respect in the international community. Once the dispute is resolved, the two could turn from tension and hostility to a new chapter of cooperation and good-neighborly relations. Pakistanis and (north) Indians are essentially the same people with a shared civilization and common food, music, culture, speech and way of life.

The costs of intransigence are arguably higher for Pakistan. According to the London-based International Institute for Strategic Studies, last year Pakistan spent 5.7 percent of its GDP on defense, compared to India's 3.2 percent. Pakistan's prospects of wresting Kashmir by force from the far more powerful India are slim. As an expatriate India, however, my concern is to examine India's policy.

India has five options. It can try to invade and annex the part of Kashmir occupied by Pakistan. This is impractical. The opportunities for a "might is right" solution were missed during the first war in 1947-48, and again with Pakistan at India's mercy after defeat in 1971. It would also violate a basic international norm, namely the inadmissibility of territorial acquisition by force. International condemnation of India and support for Pakistan would be massive and decisive. Nor could India exercise "normal" control over a larger and even more hostile Kashmiri population. India has enough insurgency and terrorism problems without taking on the burdens of another major one.

Second, India could overwhelm Kashmir's Muslim population with a program of massive resettlement of Hindus from other parts of the country. Such a distasteful option hardly befits the dignity of a free nation. The world would conclude that a policy of forcible occupation was being buttressed by demographic colonialism. The third option is to maintain the status quo. But this is to admit failure and persist with a demonstrably unsatisfactory situation that will simply eat away at the fabric of Indian society, economy and polity.

Fourth, India could submit the Kashmir dispute to international adjudication or arbitration. By taking their conflict to the World Court and abiding by its verdict, India and Pakistan would do much for the cause of achieving a world in which international relations were based on law and force is put to the service of law. This would set a valuable precedent for resolving all of India's bilateral disputes with smaller and larger neighbors alike and allow India to reclaim the moral high ground in world affairs.

The fifth option is to withdraw troops from Kashmir, stop treating the problem as a law-and-order issue, tackle the political roots of the conflict and let the people of Kashmir decide their own fate. If they wish to be independent or join Pakistan, so be it. A resolution based on self-determination would reinforce India's democratic credentials, strengthen its federalism and close a financial drain.

It would also ease Hindu-Muslim tensions. Retaining Kashmir at the point of a gun undermines efforts to give Muslims elsewhere in India a sense of security and equality. An unequivocal act of self-determination in Kashmir, combined with a proclamation of the supremacy of India's secular laws and institutions over religious laws in areas such as divorce and maintenance support, would do much to defuse the Hindu backlash that threatens to destroy tolerance and secularism in the country.

There would be external benefits. A popular or juridical solution would eliminate the most potent source of tension in relations with Pakistan, remove the basis for an anti-India security cooperation between China and Pakistan, shed a major liability in courting the Islamic world and rid India of its biggest international embarrassment.

In short, an honorable democratic solution to Kashmir would strengthen the Indian state, underscore its political values and cement the cohesiveness of Indian society. Far from threatening Indian unity and integrity even further, the "loss" of Kashmir would strengthen the remaining union. In the eyes of the people of Kashmir, India may have become expendable. In reality, Kashmir is expendable for the survival of India.

Ramesh Thakur, vice rector of the United Nations University in Tokyo, is the author of "The Politics and Economics of India's Foreign Policy." These are his personal views.

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