Tens of thousands of people were left stranded in September when floods and landslides triggered by heavy monsoon rains devastated parts of Indian-administered Kashmir and Pakistan's neighbouring Punjab province.
The panel said the government failed to take pre-emptive steps to warn Kashmiris of "more than normal" rainfall, which resulted in a big blow to the state's tourism-reliant economy, according to the Press Trust of India (PTI).
"The committee wishes to point out that the 'paradise on earth' has collapsed due to the flood and the government has to rebuild the paradise in order to attract tourists not only from the country but also from abroad," PTI reported.
Indian Kashmir has been a top tourist destination with its pristine Dal Lake, manicured Mughal gardens, glacial valleys and snow-capped Himalayan peaks -- a picturesque region described by a 17th-century Mughal emperor as a "paradise on earth".
The number of Western tourists has fallen in recent decades as a result of separatist militant unrest in the disputed region.
But the region has become increasingly popular with Indian holiday-makers who seek a mountain refuge from the scorching summer heat in the country's plains.
Kashmir's Chief Minister Omar Abdullah, who came under fire over the slow pace of rescue efforts during the floods, shifted blame to the federal government on Monday.
"If the state government was sleeping, what were the central departments doing? Why did the army not evacuate its personnel from the places that were submerged under flood waters?" Abdullah said in response to the report at a press conference in Kashmir's main city of Srinagar.
"If I have to be blamed for failing in my duties to stop the rain from coming, I accept it then," he said.
The parliamentary committee report also instructed the federal government to "not shrug off its responsibility" in rebuilding flood-hit areas and provide "requisite financial assistance".
Kashmir has asked Prime Minister Narendra Modi's government for INR440-billion ($6.3-billion) for repairing the flood damage.
The Muslim-majority state's five-phase election ended Saturday, with results due Tuesday.
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