Jammu and Kashmir's special status was scrapped last month.
Pakistan is indulging in "false propaganda, trying to create a situation in Jammu and Kashmir and tell the international community that there is unrest" in the state, National Security Advisor Ajit Doval said today, adding that terrorists, who are getting support from Islamabad, are trying to intimidate the locals in the state.
"We would like to see all restrictions go (in Jammu and Kashmir)... That depends on how Pakistan behaves. It's a stimulant and response situation. If Pakistan starts behaving, terrorists don't intimidate and infiltrate," Mr Doval said in a strongly-worded message to Islamabad.
On Friday, four people, including a two-year-old girl, were injured after terrorists attacked house of a fruit trader in Sopore district, for defying their warnings to shut shop to protest centre's move on Article 370. The state has been under strict restrictions since last month after centre announced its decision to scrap state's special status on August 5.
Today, Mr Doval asked the authorities to bring the child to Delhi's All India Institute of Medical Sciences for treatment.
Speaking about the incident to the reporters, Mr Doval said: "More than 750 trucks (of essential supplies) are moving daily from Srinagar (amid restrictions). Yesterday, two terrorists came. They wanted to target a prominent fruit merchant Hamidullah Rather. They could not find him as he had probably gone to offer Namaz."
"They took two of his workers to his home, 5 kilometers inside Sopore, where they shot at his son Mohammed Irshad and also fired upon his two-and-a-half-year-old daughter Asma Jaan. Both Pakistani terrorists had pistols and were speaking in Punjabi. The two are yet to be caught," he said.
Another similar incident happened when a shopkeeper was trying to open his shop and he was shot by terrorists, Mr Doval said.
"Pakistan is trying to create a situation and then tell the international community that there is unrest. If Pakistan stops sending signals through its towers to operatives, we can lift restrictions," he was quoted as saying by news agency ANI.
Earlier this week, Army also made similar remarks and said Pakistan is trying to push terrorists into the Kashmir Valley to disrupt peace.
Two Pakistanis with terror links were caught in Jammu and Kashmir on August 21 are proof of desperate attempts by Pakistan to push terrorists into Kashmir, Lieutenant General KJS Dhillon had said while addressing the reporters.