Public and private sector corporates are projected to require at least $31 billion (Rs 1,22,263 crore) from external commercial borrowings (ECB) to finance infrastructure projects. According to recent calculations, investment requirement for infrastructure projects in the 11th Plan has been projected at Rs 20,18,709 crore. This is 2.45 times the amount of Rs 8,22,193 crore invested in the 10th Plan.

In the current Plan, both the public and private sectors would require a debt component of Rs 9,85,702 crore. Total availability of debt funds to finance infra projects is estimated at Rs 8,25,539 crore, which leaves a gap of Rs 1,60,164 crore ($39 billion).

Domestic banks are expected to contribute Rs 4,23,691 crore and credit from non-bank financial companies would be Rs 2,24171 crore. Resources from pension and insurance companies are projected to be around Rs 55,414 crore.

The Planning Commission has also calculated a deficit of Rs 1,60,164 crore ($39 billion) to finance infrastructure projects in sectors like power, national highways, rural roads. This has come at a time when the UPA government is already preparing for polls and the fund crunch for its crucial sector could cause serious concerns.

The fund constraint, despite having included all the private players? investments and public private partnerships (PPPs), might even stall the mega airport modernisation programmes.

The government is now left with just two alternatives. It either has to work out an innovative mechanism to arrange for more funds, such as using the forex reverses or discontinue some of its flagship infrastructure programmes like 6/4 laning of golden quadrilateral and other highways development projects, construction of 1,65,244 km of new rural roads, construction of dedicated freight corridors between Mumbai-Delhi and Ludhiana-Kolkata, and capacity addition in ports.

Some other projects that might suffer due to fund constraints are 70,000-mw power generation capacity expansion plans and development of 16 million hectares for irrigation.

Finance minister P Chidambaram has already been appraised of the situation. Planning Commission deputy chairman Montek Singh Ahluwalia, who is on a visit to the US, is likely to extend the begging bowl yet again trying to raise funds for the government’s thrust sector.

Prime minister Manmohan Singh has been keeping tab on the performance of the sector and conducting periodical reviews.