Musharraf's candid remarks came days after he announced his return to active politics from London where he has been living in self-imposed exile.
"They (underground militant groups to fight against India in Kashmir) were indeed formed," Musharraf told German magazine Der Spiegel in an interview.
Asked why did Pakistan train militant underground groups to fight India in Kashmir, the former President said Nawaz Sharif's apathy to the Kashmir issue was one of the reasons, so was the fact that the world had turned a blind eye to the dispute.
"Yes, it is the right of any country to promote its own interests... when India is not prepared to discuss Kashmir at the United Nations and is not prepared to resolve the dispute in a peaceful manner," Musharraf claimed.
"The (Nawaz Sharif) government turned a blind eye because they wanted India to discuss Kashmir," he said.
Musharraf indicated he had no regrets for the Kargil intrusion, that led to an armed conflict with India in 1999, and argued that each country had a right to promote its national interest.
Musharraf slammed the international community, particularly the West, for persistently ignoring the Kashmir issue, and for singling out Pakistan for all blames.
"The West was ignoring the resolution of the Kashmir issue, which is the core issue of Pakistan. We expected the West - especially the United States and important countries like Germany - to resolve the Kashmir issue. Has Germany done that?" the former Pakistan military ruler asked.
"The West blames Pakistan for everything. Nobody asks the Indian prime minister, why did you arm your country with a nuclear weapon? Why are you killing innocent civilians in Kashmir? Nobody was bothered that Pakistan got split in 1971 because of India's military backing for Bangladesh. The United States and Germany gave statements, but they didn't mean anything," he said.
Musharraf, who overthrew Sharif's government in a bloodless coup in 1999, had also as Army chief presided over the Kargil misadventure that had threatened to scale up into a full-fledged war between India and Pakistan.
Musharraf charged the international community of courting India for strategic deals, while treating Pakistan as a rogue state.
"Everybody is interested in strategic deals with India, but Pakistan is always seen as the rogue," Musharraf said.
The former Pakistan ruler also said the worst blunder of the US would be to quit in Afghanistan without winning.
"Then militancy will prevail not only in Pakistan, India and Kashmir, but perhaps also in Europe, the United Kingdom and in the United States. That's my belief," he said.
Get Breaking news, live coverage, and Latest News from India and around the world on NDTV.com. Catch all the Live TV action on NDTV 24x7 and NDTV India. Like us on Facebook or follow us on Twitter and Instagram for latest news and live news updates.