"If our economy grows at eight percent per annum it will not be difficult for us to allocate about three percent of our gross domestic product for our national defence," Singh said.

"This should provide for a handsome defence budget," he said in comments to an annual meeting of India's armed forces commanders.

"Our priority is to pursue policies to generate faster economic growth and mobilise more resources," he added.

In February, Indian Finance Minister Palaniappan Chidambaram announced a 7.8 percent hike in its defence budget to 830 billion rupees (19 billion dollars) or 2.6 percent of GDP while laying out the national budget for 2005-2006.

India's defence budget for the year 2004-2005 was 770 billion dollars.

Military experts say India's ageing military -- the world's fourth largest -- is badly in need of modernisation.

India, one of the world's biggest arms buyers with one million-plus troops, is looking for 126 new jet fighters to replace an accident-prone fleet of Russian-built MiGs, new submarines from France, an anti-missile system from the United States and rocket launchers from Russia.

Defence analyst Commodore C.U. Bhaskar, deputy head of the Institute of Defence Studies and Analyses, said India's defence budget, which averaged between 2.3 and 2.6 percent of GDP for almost a decade, has been "insufficient for modernisation and new acquisitions of military hardware required to be relevant to changing times".

"So I think it's a very welcome development that for the first time a prime minister has made a commitment of giving three percent of GDP to defence, even if it is linked to eight percent economic growth," he said.

Bhaskar recalled that India had allocated three percent of its GDP for defence in the mid-1980s.

India has fought three wars with arch-rival Pakistan and came close to a fourth in 2002. New Delhi and Islamabad are currently in the midst of a tentative peace process that was launched in January 2004.

India and China too had a brief, bitter border conflict in 1962 but are also engaged in peace talks.

India's economy is expected to grow at seven percent in the fiscal year ending March 2006.

All rights reserved. � 2005 Agence France-Presse. Sections of the information displayed on this page (dispatches, photographs, logos) are protected by intellectual property rights owned by Agence France-Presse. As a consequence, you may not copy, reproduce, modify, transmit, publish, display or in any way commercially exploit any of the content of this section without the prior written consent of Agence France-Presse.

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