Manzoor Alyas Wani, a local sarpanch, told NDTV that the infant was certified dead and didn't get necessary medical care for two hours before being buried in a hamlet.
Locals protested, forcing the family to dig up the grave.
According to Greater Kashmir, people were shocked to see the baby alive and screaming.
The infant was transferred back to the original hospital and sent to Kashmir for treatment.
"This is the height of irresponsibility and non-professionalism," an angry local stated.
Two hospital personnel implicated in the mistake were promptly suspended, according to Deputy Commissioner Ramban Masrat-ul-Islam.