The real nightmare is that a country like Pakistan becoming a modern, and one of the top 20 economies. Pakistan is 4-5 times smaller than India, and with 5 times less population. So it'll require significantly less capital and growth to cross India, in terms of quality of life, and richness (take an example of Dubai or Singapore).
But the real issue is, if Pakistan's economy crosses 1.5 or 1.9+ trillion dollars GDP, that would allow them to take their defense budget to $ 15-20 billion (already expected by 2021-2025). So if that happens, what are the regional implications?
With $ 15-20 billion defense budget, a 4-5 times smaller country can have a big enough air force and big enough of a navy that it can pretty much match India's Pakistan specific forces, by 1:1.25 (1.25 for India). Even if India decided to leave her other areas empty (crazy idea), and go for an all out war with Pakistan, it would be very difficult to win, as there won't be a whole lot of gap in capability, and India still has to protect herself from China, etc.
$ 15-20 billion worth of defense budget existing for just a few years, can buy a LOT of modern weapons and can create a very superior force (specially, with Pakistan's ability to produce many weapons internally). Similarly, with this much budget, Pakistan's navy, facing the Indian fleet towards Pakistan (not including an aircraft carrier for apples to apples comparison), will be only 10-15% less in numbers. Which is marginal. So India loses all these military advantages she may have right now.
Now add another dimension to this, another one of the fastest growing economy, still cheaper than India, right on India's doorsteps, supported by the Chinese and the new relationships that Pakistan will form by then (with Russia, Central Russian States, African nations, the West, etc). So its an interesting situation for India. Just the Chinese trade route alone, will start to generate enough money every year that it'll take care of Pakistan's budget gaps and losses right now, through taxes, new cities which will form around the trade route, hundreds of thousands of new businesses, jobs, schools, universities, hospitals, etc, etc.
Note that Mexico's GDP is around $ 1.2 trillion and Australia's is $ 1.4 Trillion, with KSA at $ 777 Billion, but all these countries are 20-30 times smaller in terms of the Pakistani population. So there is no doubt that Pakistan can't grow her economy to $ 1.5+ trillion.
