The government is planning to utilize $5 billion worth of foreign exchange reserves for infrastructure development this fiscal.

The proposal is believed to have come up for discussion on Wednesday when Finance Minister P Chidambaram and Planning Commission Deputy Chairman Montek Singh Ahluwalia met Prime Minister Manmohan Singh, official sources said on Friday.

However, they said the proposed move to draw $5 billion from the country's $120 billion forex kitty may require amendment to the Fiscal Responsibility and Budget Management Act.

The Planning Commission, it is believed, has proposed to utilise about $30 billion from the forex reserves for infrastructure building in the next few years.

Of the total $30 billion, sources said the government might draw $5 billion from forex reserves this fiscal and the remaining in the next four years.

The proposed move is expected to serve at least two purposes -- mobilise additional funds for investments in infrastructure projects and prevent undue rise in money supply which in turn was pushing up inflation.

The need for additional investments in infrastructure was outlined in the Common Minimum Programme and subsequently by the prime minister and finance minister.