The Vidyut Vikas Patras, a tax-saving instrument on the lines of the Kisan Vikas Patras, will fund various projects in the power sector under the 11th five-year plan. The proposal was part of the suggestions made by a sub-committee of the group of ministers (GoM) on financial issues.

"The government is considering issuing bonds to mobilise resources from the general public for the power sector. The proposal has the broad support of the centre and the states. We hope it would hit the market by March-April next year," an official in the power ministry said.

The bonds will mobilise low-cost funds for the power sector to meet part of the investment needs, estimated at Rs10,64,000 crore, in the 11th plan (2007-12). The Vidyut Vikas Patras would have a lock-in period of five years, the power ministry said.

The planning commission has, however, pegged funding requirement for the power sector projects in the 11th plan at Rs7.25 crore.

Besides, the power ministry has suggested creation of a Rs3,300 crore power fund out of sale proceeds of government equity in state-owned firms.

The ministry has also suggested that funding of priority sector lending norms be expanded to cover power projects and income tax exemption limit for investment in infrastructure bonds be raised from Rs1 lakh to Rs1.5 lakh.