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NEW DELHI, Feb 28 (AFP) - Indian Finance Minister Yashwant Sinha Thursday announced a lower-than-expected 4.8 percent increase in annual defence spending to 650 billion rupees (13.8 billion dollars).

The increase, unveiled in Sinha's budget for the fiscal year beginning April 1, was modest given the current military standoff on India's border with Pakistan.

In his last budget, Sinha jacked up military spending by 13.8 percent to 620 billion rupees, prompting protests from Pakistan that India was fuelling a South Asian arms race.

Some defence experts had forecast an increase this year of as much as 25 percent to help fund India's ambitious military modernisation programme.

"It's a very modest increase and it is perhaps reflective of the fiscal priorities of this government," said Uday Bhaskar, deputy director of the Institute of Defence Studies and Analyses in New Delhi. 

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