INDIA:
Currently India GDP (2008) : $1.22 Trillion ( Google Data)
It grew by around 7-7.5% in 2009. Assuming it to be 7%.
And it is expected to grow at 9-10% Assuming it be 9%.
Hence India is expected to have a GDP at a minimum of $1.42 Trillion.
Expecting a 3% GDP defense budget due to lot of tension that is arising in the region.
A budget of $42 billion is well within limits and definitely expected.
PAKISTAN:
Current GDP(2008) : $168 Billion
Expected Growth Rates:
2009: 3%
Check
2010: 5% (I couldnt find any prediction for this year. So I am assuming this value. I would be willing to change it if any one can provide a neutral source)
Final GDP: $182 billion
Expected GDP (if 3% of budget): $5.46 billion
Please don't flame me I am just collecting facts and presenting it to you.
Btw the thing about $3 billion as military aid from US. Lets just say that currently PA is spending way more than that to fight. It takes a lot of money to just mobilize. I saw how much money was spent during Operation Parakaram.
Hence I think to assume that @3b is actually gonna help you is wishful thinking but something no other country would mind, since that would increase your overall budget and they can crib how much you are spending compared to your budget.
India on the other hand needs to use this time to modernize its armed forces since it is going through a quiet phase. Also some portions of defense budget should also be spent on infrastructure of far off region, which will gain both good will for the army as well as increase the economy of the region.