Gen Rawat also said India needs to "wait and watch" the Pakistani response in Jammu and Kashmir.
He accepted that challenges of proxy war, insurgency and terrorism will keep India embroiled for "years to come".
The Gen said the DGMOs of both sides have spoken to each other and want peace and tranquillity along the Line of Control (LoC).
The two officers spoke on November 23 and since then there has been relative peace along the LoC, he said.
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He also said the aim is to ensure peace and tranquillity and it (surgical strike) shall not be needed if there is peace.
"Our offer to the adversary is if you reciprocate offer of peace in the same manner, the need to conduct a surgical strike will not arise," he said addressing his first annual press conference here after taking over as the Army chief on December 31.
Army chief said to ensure the secular credentials of the country are not affected, one must make sure the state reverses to what it was before 1989 with "everybody there" living in harmony.
He was referring to the exodus of Kashmiri pandits when the militancy started in the state. The central government has already made it clear that it wants to ensure that the displaced Kashmiri pandits are rehabilitated in the state.
The Army chief said the proxy war, terrorism and insurgency target the secular fabric of our country.
Gen Rawat said one could see what happened when the proxy war was started in the valley in 1989.
"The secular credentials of our country was what was targeted and people were moved out from that state. So when we are looking at harmonious relationship and making sure that these credentials are not affected, we have to make sure that Jammu and Kashmir reverses to what it was pre-1989 with every body there living in harmony," he said.