He said while Rs 570 crore would be provided by the Centre for renovation of houses, Rs 175 crore will be given for start of immediate renovation work of six major hospitals across the state.
Modi said the grant of money for renovation of the hospitals would also cover immediate procurement of new equipments and machines.
The Prime Minister told reporters after meeting Chief Minister Omar Abdullah that he was "seriously considering" a demand made by people whose houses were damaged by the flood waters if the money for their renovation could be directly sent to their bank accounts.
The Prime Minister, who arrived here from Siachen, said he has directed that immediate assistance be given to school children whose schools, books and note books have been damaged by the deluge so that there is no interruption in their studies.
Earlier, Omar Abdullah briefed Modi about the status of relief and rehabilitation operations in the state and sought liberal financial assistance from the Centre to rebuild the devastated areas.
Omar had expressed the hope the Prime Minister would accept the state government's demand for a Rs 44,000- crore package for relief to the flood-hit people.
After taking stock of the situation at the airport here, Modi said whatever the state government had earlier state was being verified by the Centre.
He later flew in a helicopter to the Raj Bhawan and held interactions with delegations of political parties, business community and civil society.
This is Modi's second visit to J&K after the recent floods. During his first visit on September seven after the natural calamity struck the state, the Prime Minister had announced a Rs 1,000-crore special assistance package for rehabilitation of the victims.
Modi said one of the demands of the people today was that "whatever assistance is given to the families that have suffered should, if possible, be transferred directly to their bank accounts as it would be more convenient for them".
"I've given them the assurance that the government will look into the matter seriously, especially for (renovation of) damage to the buildings," he said.
Referring to the condition of hospitals hit by the floods, he said when he had visited the state on September 7, one of the hospitals was under water.
"Even in Leh, hospitals in Jammu and Srinagar six major hospitals need immediate renovation work," the PM said.
Modi said that "from the very first day, I have stated that my fellow Kashmiri countrymen, this suffering is not yours alone but of the entire country. The entire country stands should to shoulder with you".
He also assured the people of the state that they will never have to face the shortage of anything and the government would wholeheartedly work for their rehabilitation.
Modi said that after the "serious problem arising out of the floods in Jammu and Kashmir, especially in Srinagar, I came here immediately on September 7 and gave a package of Rs 1000 crore.
"After one and a half months, I have come again to take stock of the situation. Today, my effort was to meet the citizens, different social and business groups to understand their problems and find solutions," he said adding "it has been very helpful to understand the situation here."
The Prime Minister arrived here this afternoon to spend Diwali with the flood-hit people of the Valley. He was received at the airport by Governor N N Vohra and the Chief Minister.
Modi held a meeting at the airport which was attended by the Governor, the Chief Minister and some top officials of the Centre and the state administration.