Charging Pakistan with taking "no significant action" to dismantle terrorist infrastructure, Prime Minister Atal Bihari Vajpayee on Saturday said reports suggest that territories in Nepal and Bangladesh were now being used by the Inter Services Intelligence to persue its anti-India agenda.

"For us, the most disconcerting aspect of terrorism is that it is sponsored, supported and funded by Pakistan as a matter of state policy," he said inaugurating a day-long Chief Ministers' Conference on Internal Security.

Vajpayee said Pakistan did not appear to be interested in establishing good neighbourly relations with India.

"Pakistan has taken no significant action against terrorist camps and infrastructural support to terrorism. This questions its claim to participate in the international struggle against terrorism," Vajpayee said.

The prime minister said Pakistan was also violating the UN Resolution 1373, which enjoins all countries that they shall not support terrorism in any way and for whatever cause.

Asserting that assurances given by the leadership in Islamabad on the issue of cross-border terrorism remained unfulfilled, he said: "Therefore, we have to intensify our efforts to counter terrorism in Jammu and Kashmir," he said.

Observing that much to the discomfiture of anti-India forces, the situation in J&K "is improving," the prime minister said the immediate task before the state government was to strive to fulfil the legitimate aspirations of the people through a two-fold response. "One, to strengthen the atmosphere of peace by dealing firmly with those intent on disturbing it, and secondly, to vigorously implement all developmental, welfare and employment-generating programmes," he said.