NEW DELHI, Feb 28: Indian Finance Minister P. Chidambaram on Monday unveiled a budget, which, he said, was aimed at poverty alleviation, but allocated Rs830 billion ($19 billion) to defence , marking an increase of 7.8 per cent over his defence budget in July last year.

"Last July, in order to catch up with the backlog of expenditure that had not been provided for, I had increased the allocation for defence to Rs770 billion," Mr Chidambaram told the Lok Sabha.

"I am happy to inform the house that after a gap, defence expenditure in 2004-05 has matched the budget estimates. I propose to increase the allocation for defence in 2005-06 to Rs830 billion," he said.

He announced an allocation of Rs343.75 billion for capital expenditure, an increase of Rs10 billion over previous year's budget for arms spending, which was Rs334.47 billion.

Analysts said that in actual terms the capital outlay amounted to a fresh allocation, as the ministry, for the first time in five years, had been able to spend all the allocated funds under the head in 2004.

They said that with a huge allocation on capital outlay, Defence Minister Pranab Mukherjee could now go ahead with major arms acquisition programmes like buying killer-hunter Scorpene submarines from France, long-range Smerch rocket system from Russia and low-level transportable radars, all of which had been pending for more than a year with the cabinet committee on security.

The capital outlay funding constitutes almost 41.4 per cent of the defence budget. Mr Chidambaram said the government's overall fiscal deficit would fall from 4.6 per cent of gross domestic product to 4.3 per cent. The revenue deficit would fall from 3.5 per cent to 2.7 per cent of the GDP, he said.