According to the Nīlamatapurāṇa, Kaśmīra was occupied for the first six manvantaras of this kalpa by a vast lake six yojanas long and three yojanas wide, called Satīsara. It was so called because Mahādevī adored bathing in this lake.

Then in the 7th manvantara (Vaivasvata, the present one), the water of the lake was drained out through an outlet made with plough by Ananta at the order of Viṣṇu, who along with other gods and goddesses had come there to kill the demon Jalodbhava, who was invincible in water.

Following the slaying of Jalodbhava, the Piśācas and the descendants of Manu were settled there by Kaśyapa Muni to live in company of the Nāgas, the original inhabitants of the valley.

The same kathā about the draining of the lake occurs in Kalhaṇa’s Rājataraṅgiṇī and in slightly modified form, in the Mahāvaṃśa, the Chinese Vinaya of the Mūla-Sarvāstivādī sect and the account of the travels of Hiuen Tsang.

(Source): http://wisdomlib.org 

The native traditions of the area considers the very land of Kaśmīra to be the mother goddess Kaśmīrā—a form of Umā Mahāmāyā. In the Mahābhārata, Śrī Kṛṣṇa refers to Kaśmīra as the land of Devī Pārvatī, who as we are aware, is especially worshipped there as Goddess Śārikā.

Now, is the foregoing, or the portions of the tradition one would expect to observe in the natural world, capable of being tallied with what the natural record tells us? It turns out that until the Pleistocene, the Valley of Kashmir really was a lake, according to geologists.

Basically, the lacustrine history of the valley is clear to modern experts on the basis of the presence of deposits, in fact sedimentary layers, known as Karewas across the entire area. As per most geologists, freshwater lake deposits are what these layers very probably are.

They interpret the geological evidence to mean that the lake continued on the Himalayan side until the late Pleistocene, after which the valley was formed when the formation of the Jhelum to the south caused the lake to drain. This account readily matches the paurANika story.

Radiocarbon dating has indicated that these events transpired not less than 31,000 years ago. This is well before the time that modern narratives place the arrival of humans in the region. How are we, then, to explain the native Hindu understanding of the Vale as a former lake?

Since some of the deposits that have led scientists to conclude that Kaśmīra used to be a lake in the distant past consist of the shells of microscopic water creatures referred to as ostracodes, there is really no way in which early Kāśmīras could have deduced this on their own.

Occam's razor more or less compels one to accept the proposition that the traditions chronicled in the Nīlamatapurāṇa reflect actual experience by people living in Kaśmīra that the valley was a lake that was, at one point in time, drained.

The timeline suggested by the physical evidence also squares with our orthodox Indic chronologies. In fact, if the valley came to be tens of thousands of years ago when the Jhelum formed, this would place the occurrences deep into the Dvāpara-yuga, which ended circa 3,102 BCE.

Since in Kali-yuga, earth is essentially placed under celestial quarantine, the accounts of the Vale as having once been inhabited by humans, Piśācas, Nāgas, and even Devas are more than believable from a pious dhArmika standpoint. Let us pray that dharma soon reclaims Kaśmīra.

The information about the geology of Kaśmīra is from 'Climate and Geology of Kashmir, the Last 4 Million Years,' authored by D. P. Agrawal, Sheela Kusumgar, & R. V. Krishnamurthy. The study was conducted in the 1980s, to be precise. It has been confirmed by others since.