India has raised its defense budget for the next fiscal year, contrary to expectations that there would be a reduction in its military spending due to economic strains.

The defense allocation for the India’s fiscal year beginning April 1 is being increased by around 5% to 2.03 trillion rupees ($38 billion), from the originally allocated 1.93 trillion rupees for the year ending March 31.

In the last quarter of the current fiscal year, the Indian government trimmed defense spending by about 5% from the 1.93 trillion rupees, mainly due to the ongoing economic downturn. The revised budget stood at 1.78 trillion rupees. Defense Minister A.K. Antony last month anticipated that since the government has been passing through a recession, there could be a cut in the capital and revenue budget in the following financial year as well.

But Finance Minister P. Chidambaram noted in Parliament on Feb. 28: “The minister of defense has been most understanding and I assure him and the house [Parliament] that constraints will not come in the way of providing any additional requirement for the security of the nation.”

Of the total outlay of 2.03 trillion rupees for the next year, 867.41 billion rupees will be spent on new defense equipment, the finance minister says, up from this year’s level of about 695.79 billion rupees. That figure had been 100 billion rupees higher before the budget was trimmed. In the current budget, 1.13 trillion rupees was earmarked for revenue expenditures including salaries and pensions.

The decision to prune capital acquisitions by 100 billion rupees has pushed plans for several key purchases to the next fiscal year.

One defense analyst sees the defense budget increase as “largely symbolic, but reflects anxiety at what India sees as an increasingly hostile region in which Pakistan and China appear happy to throw their weight about.”

India has a number of large defense acquisitions in the works, including the more than $20 billion effort to acquire 126 Rafale fighters from France’s Dassault, as well as a program to buy Apache and Chinook helicopters from Boeing.

“Some acquisitions due this fiscal year will be put off to next fiscal as we have to tighten our belt to the extent possible for a better future,” Antony says. However, he had said earlier that India’s planned defense modernization will maintain its pace, “mainly because of the situation around us and the emerging volatile security scene.”