"If we only try to match them (India) militarily and buy the sort of armament which they have, we will probably not be able to afford it," Mukhtar said.
Explaining his contention, he noted that India's economy is "six to seven times bigger than" Pakistan's and its trade volumes were "five to six times greater".
"The capacity of India and Pakistan to fight was for 20 to 22 days. Now India has inducted a lot of armaments, may be they can last for 45 days, we will not be able to do so," Mukhtar said in an interview to BBC Urdu.
He was responding to a question on whether the projection of India as Pakistan's greatest enemy was the root of the country's problems.
Mukhtar noted that the two countries were taking steps to improve relations in the aftermath of the 2008 Mumbai terror attacks.
"Slowly the process of meetings has started. People are going across the border. Nobody had ever thought they could walk suitcase in hand to Amritsar via Wagah but that is the reality now and it is happening," he said.
This was happening, he said, "in spite of the fact that wars were fought, there were problems on the border and the Mumbai incident".
Asked why an incident like the Mumbai attacks occurred whenever relations improved between the two countries, Mukhtar said: "It is very unfortunate that such incidents happen and they should not happen. But there are players who are behind these incidents."
He did not give details about such elements but said some of them had been arrested and put on trial.
Matters would improve when "we decide that religion and politics should not be mixed together", he said. "Let them go side by side. There should be no restrictions on religion which is between me and my God."
Earlier this year, India and Pakistan revived their dialogue process, which was suspended for over two years in the wake of the Mumbai attacks which were carried out by Pakistan-based Lashkar-e-Taiba.
In the wide-ranging interview, Mukhtar said Pakistani military wants a speedy probe into the failure to detect Osama bin Laden's presence in the country as well as the US raid that killed the al-Qaeda leader in Abbottabad on May 2.
"The military wants the work to be completed quickly so that responsibility can be fixed and they can be punished... A security lapse is something for which a person can be punished.
"I do not believe there was a security lapse in the Abbottabad case," he said.
The Americans were "far too clever" and had superior intelligence and weaponry, he said.
"We do not have the resources to have been able to stop them," he added.
Even before the commission set up to probe bin Laden's presence had started working, some were condemning it, Mukhtar said.
With a "big incident like this, one cannot make a hasty decision" as there is a need to carry out a thorough analysis and prevent another such incident, he said.
The recommendations of the commission will be implemented. "Those responsible for negligence will have to answer, the government is capable of taking action," he added.
Responding to a question about talks with the Taliban for finding a solution to the Afghan problem, Mukhtar said both the Afghan and Pakistani Taliban will be included in the parleys.
"The government is aware where the Taliban and their institutions are located and there is no difficulty in meeting them. Talks will be held with all Taliban and the government knows where they live," he said.
The Taliban travel to Saudi Arabia for talks and they have relations with Middle Eastern countries as well. They also have contacts with some religious bodies, he said, adding these contacts mature and reach to the state level.
Without an understanding with the Afghan people, government and Taliban, there can be no solution to the Afghan problem, the minister said.