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After reaching out to Pakistan with talks with Prime Minister Nawaz Sharif in Russia, Prime Minister Narendra Modi is planning a big outreach to Jammu and Kashmir.

The Hindu has learnt that the Union government is finalising a massive “development package” of as much as Rs. 70,000 crore, sources say. The funds will be spent over the next five years on projects to be identified by the Mufti Mohammad Sayeed government, they add.

Sources in the Bharatiya Janata Party and the Union and the State governments say the package will be announced in the coming week, after Prime Minister Narendra Modi returns from his Central Asian tour and coinciding with Eid-ul-Fitr, which will fall on July 18 or 19.

Mr. Modi, along with Finance Minister Arun Jaitley, will visit Jammu on July 17 to attend the centenary celebrations of the State leader Girdhari Lal Dogra and leaders of the ruling Peoples Democratic Party are hopeful that he will visit Srinagar on July-end. “We are trying to ensure his presence in the capital at this time, as this is going to be the most important announcement by the government for Jammu and Kashmir,” a senior PDP official told The Hindu.

The package will be far higher than the one announced by the United Progressive Alliance government in 2004 under the Prime Minister’s Reconstruction Package of Rs. 24,000 crore (revised later to Rs. 36,265 crore) and is expected to be disbursed along the same lines, sources say. The projects will include a medical institute, affiliated to the All India Institute of Medical Sciences, in Anantnag, an Indian Institute of Technology each in Jammu and in Kashmir, and an Indian Institute of Management in Jammu.

It is likely to bring much cheer, especially in parts of the State such as the Kashmir Valley that were badly hit by the floods last September and this April. In June, the government announced a flood rehabilitation package of Rs. 2,437 crore taking the Centre’s assistance over the past year to Rs. 5,039 crore.

Over the past few months, Prime Minister Narendra Modi had met Jammu and Kashmir Governor and made Expenditure Secretary Ratan Watal and the Secretaries for Home, Health, Power, Education and Roadways meet State officials in preparation of a massive development package for the State. State Finance Minister Haseeb Draboo paid several visits to New Delhi to discuss the outlay.

Sources said the State government put together several proposals, pitching for projects estimated at Rs. 1,00,000 crore. The common minimum programme of the ruling alliance of the PDP and the BJP, the Agenda for Alliance, says Srinagar and Jammu will see major urban development projects and satellite “smart cities” called “New Srinagar” and “New Jammu”.

Officials will not confirm if the details of the development package or other plans for Jammu and Kashmir had come up during Mr. Modi’s talks with Pakistani Prime Minister Nawaz Sharif in Ufa, Russia. However, talks with Pakistan had been a condition in the Agenda for Alliance, which spoke of “normalisation of ties with Pakistan” and working towards “peace in the subcontinent”.

Mr. Modi made no mention of the political process or dialogue with separatists during his previous visits to the State, focusing entirely on the development agenda. During a visit to Leh in August 2014, he announced a Central assistance of Rs. 8,000 crore for four major road projects and wrote off a Food Corporation of India debt of Rs. 60 crore.

Sushobha Barve, whose Centre for Dialogue and Reconciliation, has conducted several surveys in the State, says: “Dealing with the economic crisis in the State is no doubt the first priority of the Mufti government. But it will also need some push towards a political resolution, and that first push has come from the reopening of talks between India and Pakistan.”

The package may be used to improve the infrastructure on the cross-border bus and truck routes, and open new routes across all three regions of Jammu, Kashmir and Ladakh to towns in Pakistan-occupied Kashmir, sources said .

Many development projects and reconstruction work have been held up in the State, as the government says its coffers are empty, blaming the previous government headed by the National Conference.