NEW DELHI (Reuters) - India on Monday said defence spending would grow by 25 percent in 2009-10 to $29.39 billion as it moves to modernise weapons systems and overhaul its security forces after last year's Mumbai attacks exposed major gaps.
Additionally, the country will spend $562 million exclusively for boosting border security and modernising its police force, Finance Minister Pranab Mukherjee said while reading the budget on Monday.
"Significant augmentation in the strength of the paramilitary forces is being done. This calls for more investment in creating the necessary infrastructure," Mukherjee said.
India's final proposed defence spending was nearly 2 percent higher than what was announced in February's interim budget, given ahead of the April/May general election.
"This specific allocation for border management and modernising the police force appears to be a direct fallout of the Mumbai attacks," said Uday Bhaskar, Director of National Maritime Foundation, a New Delhi-based thinktank.
Since militants killed 166 people in three days in Mumbai in November, the government has focused more on security. Immediately afterward, Prime Minister Manmohan Singh pledged an overhaul of the intelligence, police and paramilitary services.
Last year, India raised defence spending by 10 percent before announcing plans to spend more than $30 billion over the next five years to upgrade its largely Soviet-era weapons systems.
As part of that, it is planning one of its biggest-ever deals, the $10 billion purchase of 126 fighter jets.
Now India is integrating its three armed forces and increasing security along its coasts after militants from Pakistan attacked Mumbai from the sea route.
"We will do all that is necessary to modernise the security and intelligence services and that's a commitment which is essential even to deal with problems of development," Singh said after the budget was announced.
Other than increasing police manpower, India will speed up construction of fences and floodlights along its borders and build roads, Mukherjee said.
Mukherjee also announced a $100 million aid package for the rehabilitation of Tamil war displaced in Sri Lanka, a move seen as part of India's effort to retain influence over the Indian Ocean nation's reconstruction plans against Chinese competition.
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