SRINAGAR: Indian Prime Minister Narendra Modi pledged 800 billion rupees in funds to bolster development and economic growth in India-held Kashmir, a year after the worst flooding in more than a century destroyed half a million homes there.

Addressing several thousand people in a cricket stadium in Srinagar, Modi said he wanted to go beyond helping flood victims.

He promised to create jobs for Kashmiri youth by improving education and promoting industries, including tourism and cashmere wool.

"The biggest task at hand here is to find work for the youth of Kashmir and Ladakh ... our youth should get the cheapest and the best education, and of global standards," he said. Ladakh is another mountainous region in the north.

Modi steered clear of politics in his speech in the disputed region, prompting opposition leader Omar Abdullah to react sharply.

“PM Modi has made the same mistake of weighing the Kashmir issue in Rupees & Paise!!!!,” Abdullah, the former chief minister of the state tweeted.

Saturday's visit is Modi's first this year to the territory which has been plagued by militant violence for years. Nuclear-armed rivals India and Pakistan both claim Kashmir in full but rule it in part.

Violence in the only Muslim-majority region held by India has eased significantly from levels in the 1990s, when armed revolt against Indian rule erupted.

Kashmiris have been protesting against a lack of federal aid for last year's floods that the state government estimates caused $16 billion of damage.

Security forces in Kashmir detained nearly 400 separatists on Friday to prevent them from holding an anti-government protest march during Modi's visit.

Top separatist leader Syed Ali Geelani, who tried to lead a protest march against Modi's rally in Srinagar, said economic packages have not resolved the dispute over Kashmir in the past.

“Modi's visit and the economic package will not change anything, like in the past,” he told reporters before police detained him as he attempted to break his house arrest and lead a march in Srinagar.

“We'll continue to fight against India's brutal military occupation,” he said.

Mirwaiz Umar Farooq, another key Kashmiri separatist leader under house arrest, said Modi's speech was “nothing but full of rhetoric.”

Hours before Modi's rally, in footage screened on national television, police detained an independent parliamentarian, Engineer Rashid, for protesting with black flags.

Security was tight with paramilitary forces and sharpshooters deployed, while schools and colleges were shut. Internet services were suspended hours before Modi arrived.

In his 40-minute speech, Modi highlighted progress, promising improved road and rail networks, as well as branches of India's prestigious management and technology institutes.

"Kashmir has suffered a lot ... the dreams of several generations have been shattered, but I have the confidence that my Kashmir will rise again," he said.

Comparing the devastation from the floods to that in his home state of Gujarat after an earthquake in 2001, Modi said: "thousands died ... homes were destroyed ... nobody believed we would be able to rebuild so quickly."

India accuses Pakistan of backing the separatist militants fighting security forces in Indian Kashmir. Pakistan denies that saying it only offers diplomatic support to Kashmir's suppressed Muslims.

Muslim-majority Kashmir is divided between Hindu-dominated India and Muslim-majority Pakistan, with both claiming the entire territory.

A separatist insurgency against Indian rule and India's counter-insurgency campaign has left tens of thousands dead since 1989, mostly civilians.

Read: Crackdown in Kashmir ahead of Modi’s visit