"We seek peaceful resolution of all disputes and differences, especially the core dispute over Jammu and Kashmir. We, on our part, will demonstrate all our seriousness," he stated at a banquet he hosted in honour of Prince Karim Aga Khan, the spiritual head of the Ismaili community.
Musharraf said Pakistan has made consistent overtures for a better climate of relations with India.
"Mistrust and confrontation is much to the detriment of progress and prosperity of more than one-fifth of humanity that inhabits South Asia," he remarked.
"We desire tension-free and cooperative relations with India. We stand ready to enter into a dialogue anytime, anywhere."
He said Pakistan shall make all efforts to confront extremism. The government is confident about the measures that have been taken to wipe out the scourge of terrorism and extremism.
"We shall leave no stone unturned in confronting extremism and placing Pakistan on a dynamic course to meet the challenges of the 21st Century."
In this endeavour, Pakistan seeks peaceful co-existence and harmony with the entire world, particularly with its neighbours, he said.
Referring to Afghanistan, he said no country has more to gain from the return of normalcy in that country than Pakistan.
"We seek a relationship of trust and confidence with Afghanistan. We have an interest in seeing that more than three million Afghan refugees on our soil return to their homeland."
President Pervez Musharraf informed the Aga Khan that social development "is now a top priority of the government." "For too long we have ignored our basic needs in education, health and other important sectors much to our own peril," he said.
The president said Pakistan has little chance for development if the basic needs of the people are neglected.
"We believe in wide consultation between all elements involved in the development process to arrive at the best possible strategy for the advancement of our people."
He said the progress of the relatively less-developed areas of Pakistan is also receiving our due attention.
"We are cognizant of the special needs of the people living in these areas. The Northern Areas and Chitral are good examples where the government, through additional allocation of funds, is working towards the basic needs of the people and improvements in infrastructure.
Prime Minister Mir Zafarullah Khan Jamali, chairman Senate, speaker National Assembly, federal ministers, chairman Joint Chiefs of the Staff Committee, services chiefs, senior civil and military officers and notable members of the Ismaili community attended the banquet.