The Hindu newspaper said Friday the groups would deal with improving the relations between the federal and provincial government; furthering cross-border relations with Pakistan; boosting the state's economic development; rehabilitating the destitute families of militants; and ensuring good governance.
Singh made the announcement after a two-day roundtable conference to resolve the decades-old Kashmir dispute ended Thursday.
"The groups would submit their reports to the government and they would be discussed in the third roundtable," Singh said.
The prime minister said the groups dealing with the confidence-building measures across the state would comprise members from those groups present at the conference, or those nominated by parties and groups.
Singh said the measures that would come under the groups' remit include improving the condition of people affected by militancy; evolving schemes to rehabilitate all orphans and widows affected by terrorism; improving circumstances for those who have foresworn militancy; and providing employment to the Kashmiri Hindu minority.
"It is our collective responsibility to create an atmosphere where the people of the state can be free from the fear of oppression and terrorist activities and go about their normal lives like their fellow countrymen," the prime minister said.