The unprovoked attack by Pakistani troops in Poonch sector on January 8 in which the two jawans were killed and subsequent developments figured at a meeting of the Cabinet Committee on Security (CCS) which was briefed about the incident by Defence Minister A K Antony.
"We are certainly not going to agree to internationalise the issue or allow the United Nations to hold an enquiry. That demand is obviously rejected out of hand," Finance Minister P Chidambaram told a press conference after the meetings of the Union Cabinet and CCS presided by Prime Minister Manmohan Singh.
Reacting to Pakistan's proposal, National Security Advisor Shivshanker Menon asserted that the United Nations Military Observer Group in India and Pakistan (UNMOGIP) has no role. "They don't have a role," he said in a one line reply.
Mr Menon also said there has been an "increase" in the incidents of ceasefire violations and infiltration attempts in the last few months.
"In 2012 there was an, over all, increase over 2011 and that is a fact. And we are dealing with both ourselves and with Pakistan authorities," he said.
Mr Menon rejected reports that the government was rethinking or revisiting the Indo-Pak visa pact.
He also said the January 8 incident which can be termed as "reprehensible, barbaric and dastardly" has not happened for the first time but hoped it never happens again. The bodies of the two slain jawans were found in a mutilated condition.
Pakistan had on Wednesday claimed that its troops were not involved in the attack carried out inside the Indian territory in Mendhar area of J&K and said it was prepared to hold investigation through the UNMOGIP, which has presence on both sides of the LoC.
"We take a serious view of what happened...Whatever has to be done will be done," Chidambaram said while describing the incident as brutal. He also asserted that Indian troops had committed no violation of the ceasefire agreement as claimed in a media report.
Asserting that Indo-Pak ties were not a "zero sum game", official sources said "this is not the sum total of everything and has not happened for the first time. Instead of shouting, we should give them (Pakistan) time to take action".