Use of forex reserves for core sector shelved

The use of foreign exchange reserves for funding infrastructure projects seems to have been put on the backburner.

Investment was required in the infrastructure sector and "where the money comes from is not the issue", Planning Commission Deputy Chairman Montek Singh Ahluwalia told Business Standard. Ahluwalia had earlier made a case for using $5 billion (Rs 23,000 crore) each year for three years from the forex reserves to invest in infrastructure.

"Over the next 2-3 years, the issue will be to get to the limit of the resource envelope with what we have," he said at a seminar organised by The Indus Entrepreneurs today.

For the next fiscal year, the Planning Commission is working on two options for financing core sector projects.

One takes a conservative estimate of the amount of money the Centre will put in and the other is based on a much larger inflow of funds, on account of usage of foreign exchange reserves.

No formal proposal to use the reserves had been sent to the finance ministry.

The Finance Ministry and Reserve Bank of India have so far, not been favourable to the idea of using foreign exchange reserves for funding infrastructure.