"In Kashmir, separatism has come down substantially," said Narayanan said in a talk at the International Institute for Strategic Studies (IISS) Tuesday.
At the same time, he stated, India needed to be "extremely cautious in dealing with Pakistan". India has consistently alleged Pakistan foments anti-India feelings in Kashmir.
Narayanan described the Maoist movement in India, which has been continuing since 1967, as "more problematic" and added that though there have not been any serious terrorist incidents inside the country for the past seven months, the danger of this occurring remains.
He stressed that Pakistan was considerably behind such attacks by aiding organisations like Indian Mujahideen, Harkat-ul-Jehad al Islami (HUJI) and others. This was part of what he defined as Pakistan's "advocacy of asymmetrical warfare" against India.
Referring to cyber security, the former national security advisor remarked this was "a virtual nightmare". He pointed out India was yet to erect a "great wall" to ward off "cyber assault". He also cited that people up to no good were using software which rendered their activities on internet "anonymous".
That said, Narayanan dismissed Al Qaeda's potential in India.
Commenting on Al Qaeda chief Ayman al-Zawahiri's video proclamation about opening a branch in India, he concluded this was "not seen as a major threat".