The government's attention seems to have shifted firmly to ways of quickly improving the country's physical infrastructure, with big investment numbers being bruited. The initial investment numbers mentioned were $320 billion and $350 billion for the coming five years.

Now the Deepak Parekh committee has come out with a much bigger number, $475 billion.

Perhaps the government has got more ambitious, since GDP growth has crossed 9 per cent for two years in a row. Or the earlier numbers may have been an under-estimate, or the increase partly reflects the fall of the dollar against the rupee.

Whatever the case, setting apart something like 10 per cent of GDP every year for investment in infrastructure is going to be a new experience for this country -- and long overdue.

The question is whether the challenge is one of financial engineering, or of focusing on infrastructure policy in its totality. The fiscal situation has improved, corporate surpluses have ballooned, and global liquidity is such that India can easily attract the required funding if a sector looks like being an attractive bet.

This has been proven in telecom, where a single company like Bharti Airtel [Get Quote] intends to invest $10 billion over the next five years. With some recent bids for road projects showing no requirement for viability gap funding by the government (the average till now was 7 per cent), it could be argued that the highway programme too has been shown to be viable (though it does not help that the Kerala chief minister has ruled out tolls).

The railways have become a more profitable organisation with significant cash flows, and have funding commitments from Japan for the dedicated, high-speed freight corridors. Four of the big cities already have projects for new airports, and 35 other cities too are getting new airports.

In other words, in the areas where sector-viability has been established, funding has not been a constraint. To be sure, the money still has to be found, but the government does not have to lose sleep over the issue because the market can take over.

That would be true of the power sector too, if policies could be fixed. Unfortunately, even in states where the separation of power generation, transmission and distribution has taken place, accompanied by the setting up of regulators to set tariffs, the rate of improvement in the performance of the power sector has been slow -- chiefly because state governments have worked assiduously to undermine the reforms that have been put in place.

This is where the funding gap looms large. The solution does not, however, lie in looking at financing issues, it lies in undertaking power reform. Were that to happen, there would be more than enough investment flowing into the power sector.

As for the Parekh report, with its stress on more liberalisation of the capital account (something to be welcomed), tax breaks for infrastructure funding (questionable, if people simultaneously question the subsidising of poor farmers), and the use of some of the accumulated foreign exchange reserves (which this newspaper criticised when it was first proposed by the deputy chairman of the Planning Commission), each specific recommendation can be examined for its merits. But the real constraint is sector policy, not the absence of the appropriate financial tools.