Speaking at the Chief Ministers' Conference on internal security, Modi said, "it is unfortunate that the present Union Government has failed to instill faith and confidence about our defence preparedness in the common man".
Modi said the internal security of the country cannot be viewed in isolation as it is intertwined with the external security scenario and the armed forces play an important role in anti-infiltration and anti-insurgency which directly impinges on the internal security of the nation.
"In this context, any lacunae in our defence capabilities on account of resource constraints, demoralisation of the rank and file and tensions between the civil and military wings is bound to have an adverse impact on the Internal Security of the Nation," he said.
The chief minister said the centre should take proactive steps "to clear the fog of mistrust and suspicion" that has arisen on account of the "recent unseemly controversy" and not "remain content with mere issuance of statements".
Criticising the centre for its "non-consultative" approach with state governments on key security issues, Modi said the centre was creating "state within the state" by amending RPF Act, BSF Act which take away powers from state police and meddling with subjects under the state list.
He said politicisation of central agencies, including the CBI, is increasing and they are used to harass and victimise political rivals of the ruling party at the centre.
"This approach has gravely compromised the credibility of agencies like CBI and is a matter of concern since these agencies are also involved in internal security matters," he said.