In a bid to push physical infrastructure development, India Monday approved a scheme that will encourage and finance projects that are jointly developed under partnerships between private and public sector firms.

The Cabinet Committee on Economic Affairs, at a meeting chaired here by Prime Minister Manmohan Singh, has given a go-ahead to the scheme, which will be extended to entities with at least 51 percent private equity, officials said.

The eligible areas include projects for roads, bridges, railways, seaports, airports, inland waterways, power, urban development, special economic zones, international convention centres and tourism.

The gap in funding an infrastructure project under the scheme shall not exceed 20 percent of the total project cost, Finance Minister P. Chidambaram told reporters after the meeting.

But the government or a statutory entity that owns the project can provide extra funds out of its budget, but that cannot exceed a further 20 percent of the total project cost, he added.

These qualifying restrictions apart, the implementing agency for the projects must be selected through a transparent and open competitive process.

In the union budgets for the last fiscal year and the current year, a provision of Rs.15 billion ($340 million) each was marked for assistance to infrastructure development. This money and annual outlay will form the corpus of the scheme.

A committee headed by deputy governor of the Reserve Bank Rakesh Mohan had said India would require investments of Rs.7.5 trillion ($170 billion) for sprucing up its rickety physical infrastructure.

The Planning Commission also projected an investment of over Rs.4 trillion ($90 billion), excluding the requirements for urban infrastructure, during the 10th Plan period that ends fiscal 2007.

Resources of this magnitude cannot be made available through budgetary sources alone and the new scheme has been drawn to attract and promote investment in infrastructure from all segments, including the private sector, officials said.