"We've been in a very unfortunate arms race with India ever since Partition and I think we are a very unfortunate country from that point of view," he said.
"I think this must come to an end. The money wasted in defence should have gone into social sectors - it should have gone into education, it should have gone into health care," Sharif said in his first interview with The Telegraph after becoming premier in June.
He made it clear that he "sees his election victory as a mandate for peace with India" and spoke with "genuine feeling about the need for reconciliation with Pakistan's oldest enemy", the British daily reported today.
The two countries should also "settle their conflict over Kashmir", he said.
Sharif's remarks came against the backdrop of tensions between the two countries over violations of the ceasefire along the Line of Control in Kashmir. Both sides have accused each other of violating the truce.
Sharif said both countries had "wasted so much money on military hardware" and building up their defences against each other.
"They've been running after MiG-29s, we've been running after F-16s; they've been buying more tanks and we've been buying more military hardware. We've been running after submarines - how expensive they are! - and then of course India was the first one to tread the nuclear path," he said.
Pakistan emerged as a nuclear power in 1998, during Sharif's last stint as premier, by triggering a series of nuclear blasts after similar tests by India.
But Sharif said, "There will be progress and there has to be progress...If we have to prosper, there has to be progress on this.
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