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At a function in Shimla to mark the completion of Himachal Pradesh Chief Minister P K Dhumal's four years in office, Vajpayee said Pakistan was under pressure to heed to the chorus against terrorism.
He said Pakistan, which could not retain control over the Muslim-dominated East Pakistan (Bangladesh), was now speaking of gaining control over Kashmir.
Vajpayee said he was hopeful of an improvement in the situation.
The prime minister said that the recent attacks on Parliament and the Jammu and Kashmir assembly did not indicate that Pakistan wanted friendly relations with India.
He commended the security forces for repelling the attack on Parliament on December 13, adding if the terrorists had succeeded in their nefarious designs, there would have been a lot of bloodshed.
"Our security forces closed the gates of Parliament and foiled the attack," he said.
On the events in Gujarat, Vajpayee said that the country needed internal peace and brotherhood.
"Those who stay in our country should live in peace and harmony," he said, adding that the government did not discriminate on the basis of caste and religion.
Referring to the Pokhran tests in 1999, Vajpayee said that the world had opposed the nuclear tests, but the government had decided to go ahead with it.
On the economic front, he said the economy had registered a growth of 5.4 per cent. "We want to double the rate. But it will take time."
The prime minister said that the country was facing financial problems with revenue expenditure accounting for a large chunk of payments.
"Raising money for development is a problem, but we are winning the battle," Vajpayee said.
Referring to the new taxes in the budget, he said though resources were needed for development, the government was trying not to burden the common man.
He said that the number of people living below the poverty line was declining as a result of various steps taken by the government.
PTI
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