Prime Minister Manmohan Singh (search) met with Kashmiri political leaders on Thursday during a rare visit to the Himalayan region aimed at ending half a century of separatist violence that has claimed tens of thousands of lives.

Earlier, Singh offered to hold talks on Kashmir (search) "with anyone and everyone" but ruled out any redrawing of the disputed territory's frontier, which separates Indian- and Pakistan-controlled portions of the region.

Singh — on his first visit as prime minister to India's Jammu-Kashmir state — also announced a four-year, multibillion-dollar development plan he promised would result in thousands of jobs for people in the region.

Singh's two-day trip came as India began withdrawing some of its troops on the border, a goodwill gesture to war-weary Kashmiris and rival Pakistan (search).

On Thursday, Singh met with members of the state Cabinet to discuss ways to implement the economic aid package.

He was also scheduled to meet with army and paramilitary force commanders to review a decision to reduce troops deployed in India's Jammu-Kashmir state.

Although Singh's visit was largely welcomed by Kashmiris, many were inconvenienced after security forces barricaded the main streets of Jammu, the state's winter capital, ahead of his arrival. Children and office workers trudged to their schools and offices after public buses were halted as part of the stringent security measures in the city.

Kashmir is divided between India and Pakistan but both claim the region in its entirety. India accuses Pakistan of arming Muslim insurgents fighting for the region's independence or merger with Islamic Pakistan. Islamabad denies that.

Talks with Kashmiri separatists began last year under Singh's predecessor, Atal Bihari Vajpayee. Singh indicated his government also would press to end tensions with Kashmiri militants and Pakistan.

But Singh shrugged off a suggestion by Pakistani President Gen. Pervez Musharraf last month that some areas of Kashmir be made independent, placed under joint Indian and Pakistani control, or put under United Nations administration.

"Any redrawing of the international borders is not something that is going to be acceptable to us," Singh said.

Singh also Wednesday addressed a rally of some 12,000 people.

"I have come here with the realization and hope that I can understand what your aspirations and desires are," he said, barely visible as he spoke from behind a bulletproof screen.

India has cited a decline in separatist violence as the main reason for its troop withdrawal, which reportedly will be about 40,000 of the half-million stationed in Kashmir.

But a gunbattle launched by militants hours before Singh's visit underscored the fragile security of the region. Two militants were killed and two soldiers and a civilian wounded in the attack near the rally site, security forces said.

Singh announced an economic development plan for Kashmir that would spend $1.5 billion next year, part of a $5.3 billion, outlay over four years. Some of the money will come from international financial institutions.

The funds would go to building new roads and schools, and developing infrastructure for water, power and health care. The initiatives are expected to create 24,000 new jobs, including 14,000 for women.