I suggest you read the recent Rand study about how terrorist groups end. It is an education in itself and shows why pointing fingers like a mad dog at a nation does no good. Trust me, you and we both don't want things to degenerate back to where they were. It's not good for your economic ambitions (American companies won't tolerate it) and not good for Pakistan's standing either.
(2) local police and intelligence agencies arrested or killed key members (40 percent). .
You are right both the economies are tied to the American support ... though the Indians have to "work" to get theirs :) .... but that is a separate topic.
Coming back to your suggestion from Rand report .... this is what India has been preciely asking from day one. Indian's are aware that the best possible way this threat can be ended is by number 2 of the rand report ..... effective local policing and using intelligence agencies. Pakistan had made a pledge not to let anyone use its terriroty to be launch attacks against India .... now if they had kept their end of bargain ..... this mess would have not been there.
If they had acted against these jehadi groups well in time ... i mean banning is one thing but letting them operate, it is not done. Even today the preisdent is saying it the "non state" actors .... well if they are operating from HIS soil then HE have to act !!!!!!