Mumbai: The government will shortly set up a new company to utilise foreign exchange reserves for setting the country''s creaking infrastructure right, finance minister P Chidambaram said in an interview to a news channel.

"We will set up in the next two - three months, the special purpose vehicle that I had promised," finance minister P Chidambaram said in an interview to CNBC-TV18.

The SPV, he said, will borrow foreign exchange reserves from the RBI and co-finance external commercial borrowings (ECBs) for import of machinery by Indian firms.

India has a huge forex reserve of more than $200 billion, one of the largest in Asia, and there has been an ongoing debate on using this fund for improving infrastructure, Chidambaram said.

The country would require around $320 billion for developing infrastructure in the next few years.

He argued that using this reserve for core sector projects would not fuel inflation as this would be spent outside India for buying capital goods.

Moreover, companies were already allowed to invest up to three times of their net worth abroad, he pointed out.

Consumers should be ready to pay extra for achieving food security for the country. Farmers were subsidising Indian consumers who do not mind "paying Rs10 for a mineral water bottle" but resent paying even one rupee extra for wheat or sugar, he said.

On capital account convertibility, he said developed economies have achieved full currency float and India should also learn to manage "fully or near fully convertible capital account".