The planning commission on Wednesday approved Rs 6,600 crore annual plan for Jammu and Kashmir for 2011-12, Rs 600 crore higher than the last year's outlay.

The annual plan for the state was finalised here at a meeting between the deputy chairman, planning commission, Montek Singh Ahluwalia and, Jammu and Kashmir Chief Minister Omar Abdullah, an official statement said.

Besides, the state has also got an additional allocation of Rs 1200 crore under the Prime Minister's Reconstruction Plan.

Complimenting the state for the smooth and successful conduct of Panchayat elections, Ahluwalia said the move would help in ensuring more inclusive growth.

Omar Abdullah while briefing the mediapersons said the increase in plan allocation would help the state in its efforts to decentralise the financial powers to the local bodies.

"This, for us, is the year during which we hope to devolve the maximum amount of power to the grassroot. We conclude the Panchayat elections this month. We expect to have elections to the urban local bodies in the autumn of this year.

"So that by the end of this year, we have the third tier of the government, not only in place but made fully functional as well," the CM said.

He said the railway link work was going on in the state.

"We hope that sometimes next year, the tunnel under Banihal Pass would be completed and therefore, Jammu will be joined to Kashmir...I think by joining tracks to Katra from Jammu will take a little longer time," Abdullah said.

He said that the two mega infrastructure projects -- on Jammu-Srinagar rail link and four-laning of Jammu-Srinagar national highways -- were in progress.

"The completion of this project would add enormously to the quality of connectivity between Kashmir valley and the rest of the country," Abdullah said.

Ahluwalia appreciated the efforts of the state government towards improving the infrastructure and basic services. He said appreciable improvement has been noticed in health, education and drinking water sectors.

The Plan panel chief said that policy initiatives aimed at further improving public private partnership in the development of both physical and social infrastructure were needed. He pointed out that the infrastructure gaps can be bridged much faster with investor friendly approach.

"The successful elections to the Panchayats has been quiet outstanding...The Jammu and Kashmir cabinet has approved the appointment of the State Finance Commission, which will carry through the next stage of actually devolving financial powers to the newly elected bodies.

"That's an act of historic importance," Ahluwalia told reporters after the meeting.