He said he believed Vajpayee was a "man of peace" and the two leaders had almost reached an agreement at Agra Summit talks in 2001.

"The invitation to Agra was a genuine try (of Vajpayee to resolve the disputes). However, the first try -- the Lahore bus trip -- was not a try at all because he was not ready to resolve issues at that time," Musharraf said in an interview to NDTV.

Recalling his meeting with Vajpayee at Agra, Musharraf said, "we had drafted the Agra Declaration. I believe he (Vajpayee) is a man of peace. Our thoughts are similar on peace."

On reports that he as Army chief had refused to receive Vajpayee on his Lahore trip in February 1999, the Pakistani leader dismissed it as misconception and said, "I welcomed him at the airport. I was the first to shake his hand. I did not go to Wagah because I was in uniform."

Asked whether converting Indo-Pak border into a soft border was a possibility, he agreed, saying "people-to-people contact was necessary."

"But it cannot solve the problem, although it can be a way forward," Musharraf said.

He said Kashmir was not standing in the way of improving economic situation and removing poverty in Pakistan even during the "maximum confrontation" with India.

"Poverty has declined in Pakistan recently," he claimed.

Meanwhile, asserting that India was not satisfied with Pakistan's response to its peace initiative, Deputy Prime Minister L K Advani on Saturday said in New York that the Kashmir issue could be resolved but would require "some kind of compromises" from both sides on "extreme positions" taken by them.

"The moment talks start (between India and Pakistan) after conducive atmosphere is created, India is ready to discuss all issues, including Kashmir on which both sides have extreme and different positions," Advani said in an interview in New York.

He maintained that even the "most contentious issues" across the world have been resolved through dialogue.

"It is not impossible and beyond ingenuity of the two countries to resolve the issue. But it would require some kind of compromises from both sides on extreme positions they have taken," he said.

Asked whether India was satisfied that Pakistan was doing enough to create a conducive atmosphere for dialogue, Advani said "although while here, I do not want to be seen as pointing fingers, we are not satisfied as yet with the response."

"While I have been here, I have been getting reports of repeated efforts of infiltration which have been frustrated by our security forces," he said.

To a question, the Deputy Prime Minister said he had "no doubt that Pakistan is in control" of terrorist organisations.

"It is not that the terrorist organisations are doing something on their own. There is a full-fledged infrastructure of terrorism that has been built up (in Pakistan) over the years," he said.