NEW DELHI - The Indian government is planning to create a $11-billion debt fund to bridge a funding shortfall and ease the financing of power sector projects, Mint newspaper reported on Tuesday citing a government official.

"The fund is in the process of being formulated," the paper quoted Power Secretary P. Umashankar as saying.

The fund would be the latest in a series of recent government measures to overhaul India`s creaky infrastructure, long seen as a drag on growth in Asia`s third-largest economy.

A separate $11 billion debt fund for infrastructure has already been announced and could be implemented by the end of the year.

India`s Planning Commission said in a report last week capacity shortages in the power sector could prevent India from achieving double-digit growth. The commission predicts India will likely add 62,000 megawatts (MW) of power capacity in the five years to 2012, short of a 78,000 MW target.

BDST: 12:45 HRS, July 27, 2010