In other words, if we abandon Kashmir and let India do an Israel there, there will be peace. You're talking about the kind of peace between Israel and Jordan/Egypt. No thanks, that's not peace, that's bullying. We're not going to be bullied.
Now let's get back to the topic under discussion.
India's GDP is their strength, but they can't keep ignoring the almost 50% poverty rate. Eventually, the people will speak out against 10 billion dollar deals for expensive toys. The perceived threat is being shifted from Pakistan to China, but I'd like to think the Indians won't stand for Cold War-style exaggerated threat assessments to boost military power simply for the sake of it. Hence the posturing up against China, retaliatory posturing will be presented as "proof". The Soviet Union is prime example of what happens when you divert money to the military when it ought to be spent on the people. Also, we don't need to "keep pace" with India, by matching them step for step we will be committing the same blunders as them, which is unacceptable in a country as politically volatile as Pakistan. We simply need to make sure they don't get out of hand, and that is something we know how to do. Anyway, that was just a comment on what you said. Don't buy into the whole "superior economy" "weak economy" hype, always plan for the worst, I'm sure your military does the same (lesson from 65).
On the MMRCA, competition, of course it is a threat to the PAF, the top aircraft in the world are being made available to our enemy. But, every threat can be dealt with smartly. National Defence is based on measure and countermeasure. Throwing money and resources at the problem will be pointless. We are not the US, we are not even India, and thought is free, so let's use that before we use our cash (that was for people who say buy J-11s now). "Minimum deterrence" is something we do very well.