Former Jammu and Kashmir [Images] chief minister Mufti Mohammad Sayeed has mooted the idea of making Jammu and Kashmir a model among the countries of the South Asian Association for Regional Cooperation by allowing both Indian and Pakistani currency to run in the state.

Addressing a public meeting in Mahore town of Reasi district on Sunday, the ruling Peoples Democratic Party patron said: "Jammu and Kashmir should become a model among the SAARC countries by allowing both Indian and Pakistani currency to operate in the state."

Mufti defended his proposal by quoting the example of European Union, where he said "free travel was possible among 40 countries without any visa restrictions."

"There is a proposal in SAARC of a free economic zone and Jammu and Kashmir could take the lead and become a model by allowing both Indian and Pakistani currencies here," he told the meeting.

Many believe Mufti's latest statement may rake up a new controversy even as dust was yet to settle on senior PDP leader and state finance Tariq Hameed Karra's statement last year in which he had proposed that 'the state could have its own currency'.

Karra had, however, later dissociated himself from the statement after it was bitterly criticized by other parties in the state.

Mufti said his party was committed to 'strengthening unity among all the regions of the state, but there should be no regional disparity.'

"After formation of coalition regime in 2002, many steps were taken to remove regional imbalances," he said, adding, "I am in favour of making an institutional arrangement wherein there is a constitutional guarantee of fair deal with all regions and sub-regions."