You are partially correct, I always considered that changing our 'unofficial' stance from "Whole of Kashmir is integral part of India" to "We may consider LOC as IB" was a big mistake, but that happened during a period of a softer government, I hope the unofficial stance will be changed to the original one soon.
Also, suddenly shutting down all our intelligence activities inside Pakistan during IK Gujral's rule was another big mistake, we need to kick-start it again if we haven't done so already.
Then, asking Pakistan for punishing the same terrorists that they themselves have created and sheltering in their country is stupidity, we should simple consider assassinating these terrorists inside Pakistan by all means possible, ethics don't count here.
Further, we need a policy of equal & prompt reciprocation, any terrorists activity by Pakistan need to be retaliated with a terrorist activity of equal or more intensity, there are people inside Pakistan who would be happy to do that if provided with sufficient funding.
Finally, we need to help all the separatist movements inside Pakistan by all means possible, be it Balochistan or Waziristan or FATA.
I think these strategies will be beneficial for us in the long run.
Btw, I have some interesting plans for the
Indus Waters Treaty also.