No that's not true. While economic considerations are indeed important in defence spending, Pakistan's Security needs carry prime importance.
Secondly, its not a matter of 'matching' our defence budget with India or Israel, but matching the 'capabilities' in adequate numbers. Thats the crux of the matter. For instance, India may need an aircraft carrier, but Pakistan does not. On the other hand, it needs adequate weapons platforms to destroy Indian ACCs if and when the situation arises.
Your assertion also is a point of an arms race, which India has started. We are just trying to keep ourselves secure. Even if we don't like want to purchase anti ACC misslies, we will HAVE to due to Indians induction of the same. Its complex and therfore does not have any simple answers.
All in all, I do not think that arms race can ever be curtailed despite conventions and conferences and bodies promoting the idea. Its simply un achievable.
---------- Post added at 04:48 PM ---------- Previous post was at 04:47 PM ----------
Easier said than done, stop looking at things in respect to 'zero-sum'.
China ko rokney se pehley, US A-stan se bhaag jaey ga, and then YOU will be stopped