The tourism ministry has finalised the proposal for setting up a Rs 500-crore Tourism Development Fund, an approval for which will be sought from the Cabinet soon.

About half the funds were to be spent on assisting local authorities in bridging minor infrastructure gaps, official sources said.

The fund, which sought to boost tourism by focusing on infrastructure creation, was announced by Prime Minister Atal Bihari Vajpayee on August 15 this year.

At the quarterly performance review of the department of tourism, Planning Commission Deputy Chairman KC Pant asked it to involve the private sector and the Railways in the development of tourism infrastructure.

While the emphasis will be on public-private partnership, the ministry is facing a problem as the private sector has not been too forthcoming.

The tourism ministry has, therefore, been asked to consider subsidising private sector participation in long-gestation projects.

At the meeting, Pant emphasised the need for better fund utilisation in order to check underfunding of schemes. He called for the prioritisation of projects and for funds to be released accordingly.

The tourism ministry has already dropped 90 schemes between 31 December, 2002 and 31 March, 2003 as states failed to show any interest. The plan body has suggested bringing in private players where states are not willing to participate.

At the meeting, the department was asked to focus on the provision of globally acceptable drinking water and good hygiene and sewerage facilities when working on projects to promote tourism. Stating that funds would not be a constraint if backed by performance,

Pant asked the ministry to study the socio-economic impact and employment creation of ongoing schemes.

As about 97 per cent of tourists travel by air and connectivity was a major problem, the tourism department had asked the Naresh Chandra Committee on civil aviation to ensure that there was a consistent policy on allowing additional flights in the October-February period rather than ad hoc announcements every year, said official sources.

It has also asked for a central sales tax on aviation turbine fuel rather than the current state wise sales tax, they added.

The department will also move a Cabinet note on making tourism a subject in the concurrent list despite strong opposition from eight states.

Tourism is listed in neither of the three lists in Schedule 8 -- central, state or concurrent -- and therefore comes under the states' purview.

Andhra Pradesh, Karnataka, Kerala, Tamil Nadu, Maharashtra, Rajasthan and Jammu and Kashmir are in favour of maintaining a status quo in the issue, said sources.

Pant has asked the department to create a model legislation, based on international experience and create a consensus among states on the issue.