NEW DELHI: Union Finance minister Arun Jaitley's recent remarks on Jammu and Kashmir in Parliament has caused a flutter within the Peoples Democratic Party which is seemingly gearing up for government formation in the state.

After over two months of political deadlock between the BJP and the PDP, who were ruling the state for nearly 10 months before the demise of the chief minister Mufti Mohammad Sayeed on January 7 brought down curtains on the alliance, Jaitley's remarks that the Centre is willing to "walk the extra mile" for development of J&K has brightened the chances of government formation.

The speculations that the two parties may have mended fences were fuelled after the State Administrative Council (SAC) meeting, which was scheduled to approve the budget for Jammu and Kashmir on Tuesday, and another meeting to discuss the upcoming local body elections, were postponed by the government.

Senior PDP leader and former education minister, Naeem Akhtar, said Jaitley's remarks will have a positive impact on the talks currently going on between the two parties, "The state of J&K faces humongous problems on political and economic fronts. We welcome the statement (of Jaitley) and we are hopeful that the Centre will work for fulfilling its commitments," Akhtar said.

Jaitley had told the parliament that New Delhi is willing to walk the extra mile for J&K, while assuring "equitable development" of J&K’s all three regions. “We want to implement Rs 80,000 crore economic package of Prime Minister Narendra Modi for equitable development of the three regions of Jammu and Kashmir,” Jaitley said.

Giving further credence to the rumours, the PDP president Mehbooba Mufti Tuesday left for New Delhi. "The parliament session is on. After hectic activities involving the membership drive, the party president has gone to attend the last days of the budget session," a PDP leader, wishing anonymity, said.

However, another PDP leader said the "unscheduled departure" of the party president to the national capital was linked to the government formation in the state. Sources said the PDP chief was recently offered meeting with the Prime Minister Narendra Modi by the BJP interlocutors who have been holding negotiations with the PDP's Dr Haseeb Drabu and Amitabh Mattoo in the national capital. But the offer was turned down.

"We don't know whether any meeting (between Mehbooba and the BJP leaders) has been planned, but we will not be surprised if the meetings take place," the PDP leader said, stressing that the rightwing party has made "right moves" over the last two months of political deadlock in the state.

"We have seen positive movement on the issues like setting up of AIIMS in Kashmir, wresting back land and buildings under the occupation of armed forces, additional funds for the state in the union budget and other developmental initiatives which have set the right tone for government formation," the PDP leader said.