Addressing a public meeting here, Modi also appealed for peace in the restive Kashmir Valley, saying his government was looking for developmental solutions to people's problems.
"Both the Centre and the state government are attempting to find a solution to all problems through development. Former Prime Minister Atal Bihari Vajpayee's vision of Insaniyat, Jamahooriyat, Kashmiriyat will be taken forward," Modi said.
Mehbooba Mufti on Monday said the central government must initiate the "peace process" that Vajpayee began in 2003. "There will be a chance to continue the dialogue that was begun during the government of Vajpayee," she said.
Modi said a handful of "misguided people" were harming the great traditions of Jammu and Kashmir and urged its youth to help make the state a paradise.
"A handful of people, who have been misguided, are harming the great traditions of Kashmir. I call upon the youth of Kashmir to move forward with the vision of making Kashmir a heaven on earth," Modi said.
Modi chose to speak on the troubles in the valley publicly for the first time during the launch the "70 Saal Azadi, Yaad Karo Kurbani" celebrations at the birthplace of freedom fighter Chandrashekhar Azad.
"Kashmir wants peace. Whatever Kashmiris want for betterment of their livelihood, the centre will provide," he said.
The Kashmir Valley has been engulfed by violent unrest since the July 8 killing of a rebel commander, leaving over 55 people dead and thousands injured.
Talking about stone pelting incidents in Kashmir, Modi said: "The children or youths in whose hands there should be laptop, book, volleyball or cricket bat, who should have dreams in their hearts, such innocent (youths) are given stones to pelt. Humanity and Kashmiriyat will not be allowed to be hit. The path of democracy and dialogue is there.
"This can allow some people to do their politics but what will happen to these innocent youths? Be it the Jammu and Kashmir government under Mehboobaji or the central government, we are finding solutions to all problems through development. But some people want destruction there," he said.
The Prime Minister said every Indian loves Kashmir and desires to go there.
"Kashmir wants peace. The citizens of Kashmir want to earn more money through tourism. We want to ensure jobs for youths of Kashmir."
Modi thanked all the political parties for speaking in one voice over the Kashmir issue.
He said the need of the hour was for everyone to work together with a common resolve to take the nation to new heights.
The Prime Minister paid floral tributes at Chandrashekhar Azad's birthplace and visited an exhibition related to the life of the freedom fighter who shot himself dead in an Allahabad park to avoid capture.
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