Considering the changed security scenario in view of the Mumbai terror attacks, the government on Monday allocated Rs 1,41,703 crore (Rs 1,417.03 billion) for defence sector, almost a 35 per cent increase from the previous year's budget provisions.

Last year's allocation for Defence stood at Rs 1,05,600 crore (Rs 1,056 billion) and the current increase amounted to Rs 36,103 crore (Rs 361.03 billion).

Presenting the Interim Budget for 2009-10 in the Lok Sabha, finance minister Pranab Mukherjee said the allocation has been increased because of the prevailing security environment, which has 'deteriorated considerably.'

Noting that the Mumbai attacks had amounted to the threshold being crossed on the security front, Mukherjee said, "We are going through tough times. The Mumbai terror attacks have given an entirely new dimension to cross-border terrorism."

With the total revised expenditure for Defence last year standing at Rs 1,14,600 crore (Rs 1,146 billion), he said the increased Plan expenditure for Defence this year would be Rs 86,879 crore (Rs 868.79 billion).

Last year's Plan expenditure was only Rs 73,600 crore (Rs 736 billion), thereby providing an increase of Rs 13,279 crore (Rs 132.79 billion) this year.

The increased allocation this year would include Rs 54,824 crore (Rs 548.24 billion) focapital expenditure as against Rs 41,000 crore (Rs 410 billion) in the revised estimates for 2008-09, Mukherjee said.

However, the government would provide for any additional requirement for the security of the nation, he added.

The increased allocation for defence assumes significance as the government has decided to go on fast track acquisition of defence equipment.

The armed forces have already prepared a long list of equipment, mainly for its special forces commandos, to be bought under the fast track process.

After the Mumbai attacks, the government has initiated a massive revamp of the security structure of the country, which includes creation of a Coastal Command.

Despite the nearly 35 per cent increase this year, India's defence spending is still at about 2 per cent of the GDP, compared to China's 7 per cent and Pakistan's 5 per cent.