Union Home Minister Rajnath Singh, without disclosing the details about the parleys, said "we are in talks" and refused to divulge the party with which BJP was holding a dialogue on government-formation saying "yeh andar ki baat hai (it's secret)".
He assured that a "democratic government" will be in place soon.
Though Singh did not divulge any further information, sources say that most of the issues between the two parties have been settled which includes having a common minimum programme, leaving out contentious issues like Article 370, resettlement of west Pakistan refugees, self-rule and going soft on separatists.
PDP, with 28 seats, is the single-largest party in the state Assembly, which is currently in suspended animation, while BJP has 25 seats and enjoys the support of at least two other MLAs in the 87-member House.
Governor's rule was imposed in the state on January 9, a day after National Conference leader Omar Abdullah asked Governor N N Vohra to relieve him of the duties of caretaker chief minister with immediate effect.