"If political parties have some understanding with central government then they should contest," Baig told in an exclusive interview.
"Otherwise, the excuse will be you did not contest the elections, you are not the representatives of the people and why should we listen to you to restore the statehood and grant you the benefits of Article 371 of the Constitution of India."
He said the decision on contesting elections will arise only after political leaders are released and have an interaction with civil society of Kashmir and people from Jammu and Leh.
He said political parties in Kashmir must forget their differences to raise the issues concerning Jammu and Kashmir with the Centre in a single voice and get assurances on the promise of statehood and fight for bringing Jammu and Kashmir under the ambit of Article 371.
He said if political parties don't set aside their differences, a new force may emerge.
He state the Assembly has hardly any powers in a Union Territory. He asked why people would contest elections if they are disempowered.
He said once there are assurance by the Prime Minister and the Home Minister that after the situation improves Jammu and Kashmir's statehood would be restored, political leaders should politely urge the government of India to redeem its pledge.
"Now whether this is done before the elections or after the elections is a matter of detail," he said. "But there must be an understanding. We are a hill state and the Constitution has provided special provisions under Article 371 for all the hill states with domicile rights like those they enjoyed under Article 35A."
He said domicile rights should also protect the right to property, jobs etc while the Supreme Court judgement is against the petitions challenging the Centre's move to revoke Article 370.
He said the starting point for any political activity in Jammu and Kashmir would be the release of the detainees.
"I think they have been detained under section 107 for which people can be released against personal bonds," he said, adding "Those who have criminal or corruption cases against them should be tried in court."
He said the situation in Jammu and Kashmir poses a historic challenge and demands consensus.
"It's only in a crisis that the true leadership is tested," he said.
( With inputs from IANS )