"The Shimla agreement was a big mistake (on the part of Islamabad) as it dampened the spirit of the Kashmiris fighting for their freedom and hurt their movement," he told a conference here.
Shahbaz Sharif is the brother of Prime Minister Nawaz Sharif.
Sharif's statement evoked sharp criticism from the Pakistan Peoples Party (PPP), whose then Chairman and Prime Minister Zulfikar Ali Bhutto and his Indian counterpart Indra Gandhi signed the pact in 1972.
"Someone should teach the CM Punjab what foreign policy is. He can't possibly think mimicking SZAB (Shaheed Zulfikar Ali Bhutto) makes him a statesman," tweeted PPP Chairperson Bilawal Bhutto Zardari.
The agreement resulted in the release of some 90,000 Pakistani soldiers imprisoned by India following the 1971 war that led to East Pakistan breaking away and emerging as an independent Bangladesh.
Sharif also hit out at cricketer-turned-politician Imran Khan and said that instead of heading towards the Indian border, they were indulging in protests that were dividing the nation.
He offered to hold a joint rally with Khan on the Indian border against what he said were "atrocities" in Jammu and Kashmri.
