Peace process with Pakistan: Can peace and terrorism coexist?

I feel that we lost the purpose of continuing peace process with the Pakistan. I'm saying this because before this peace process commenced, we had unequivocal stand that we will not engage Pakistan until they stop cross border terrorism but due to American influence and Pakistan's assurance that they wouldn't allow any of their territory to be used for terrorist activities and won't provide any clandestine support to them, we engaged Pakistan in a dialog to resolve difference over Jammu & Kashmir issue and to improve relations between two countries. Initially it appeared that pakistan was some what honest with this peace process because number of infiltration attempts came down, perhaps this could be attributed to the winter season which made routes inaccessible to these infiltrators, nevertheless number of infiltration attempts were less when compared to the previous year but as time progressed slowly they returned to their old ways. They made their stand inflexible and demanded more concessions from India and offering very little from themselves. It should be noted that number of terrorist attacks against civilians gradually increased and recently in the Herald magazine, it was reported that they have set up new camps and opened old ones, there are 13,000 terrorist to cross over to India, This has been denied by Pakistani government, even after Indians told that they can provide photographs of these camps.

My displeasure is mainly due to in a manner which Indian government had exonerated Pakistani government from the responsibility of these terrorist attacks and irrespective of these daily murders, they desire to carry forward peace process without having any accountability on Pakistan for sponsoring terrorism. Even Musharraf in his Australian visit had stated on one such terrorist attack, that even after reaching any agreement with India, we can't expect these incidents to come down. First of all, Pakistan started this low intensity terrorism to achieve its objective: J&K and what is the use of having a settlement on J&K but still continuing this terrorism?

Sometimes, I wonder whether we are getting used to this low intensity cross border terrorism because we seem to care less about the people who die on regular basis as it won't affect us directly and our condemnation only depends on cruelty & magnitude of the incidents. Perhaps, victims of not so significant terrorist incidents remain mere statistics for us!.