NH:
My figures, as I mentioned, were from the 2008-2009 budget numbers from the governments budget website - depending upon the exchange rate given the depreciation of the rupee from 65 - 80+ per dollar, the defence budget works out to be about 2.75% of GDP, and about 14% of the total budget.
For the 2009-2010 budget, the total budget is 2.9 trillion with a defence budget of 343 billion = 11.7% of total budget. That is a pretty significant drop in terms of the defence budget as a proportion of the total budget.
Using the current exchange rate of 1 USD =80 Rs. - 343 Billion Rs. = 4.2 billion USD.
Pakistan's estimated GDP for 2008 (per CIA site quoted earlier by fateh) = 160.9 billion USD.
Defence budget as a proportion of GDP: 2.61%. Which is also a drop from last years 2.75%.
https://www.cia.gov/library/publications/the-world-factbook/geos/PK.html
I should correct my last post - it is not only the Indian media that bandies these high defence spending figures about, some commentators in the Pakistani media do it as well.
The motive for the Pakistani commentators lies in the love hate relationship with the Army many commentators and intellectuals enjoy, primarily because of the many years of military rule Pakistan has seen. Because the scars from those years are still fresh for many of these people, Army bashing is a favorite past time.
The Ahmed Qureishi article you quoted uses numbers for 2003-2004, which are quite old.
Beyond that, you have to distinguish between defence spending as a percentage of GDP and defence spending as a percentage of the total budget (as Fateh pointed out already) - you are mixing and matching the two numbers.