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ISLAMABAD, June 11 (Reuters) - Pakistan increased defence spending by nearly 7 percent on Wednesday, to 296.07 billion rupees ($4.4 billion), for the 2008-09 fiscal year starting on July 1.

In the preceding year ending on June 30, Pakistan spent 277.26 billion rupees on defence, according to budget documents presented in parliament by acting Finance Minister Naveed Qamar.

Prime Minister Yousaf Raza Gilani said this week the budget allocation for defence had gone down in real terms because of inflation, and in dollar terms.

Gilani said he hoped to see a reciprocal gesture from neighbour India.

India increased its defence spending by 10 percent to $26.5 billion in its budget for 2008-09, announced in February.

Pakistan has fought three wars with India since their independence from Britain in 1947.

The two rivals became nuclear armed in 1998, but their ties have improved since they launched a peace process in 2004, having gone to the brink of war in 2002.

Despite better relations, they have continued to focus on building up and modernising their military forces.

Besides the annual budget allocation, Pakistan has received more than $10 billion since it joined the U.S.-led war on terrorism in 2001. Most of this aid has been for the military.

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