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NEW DELHI - India's federal cabinet on Tuesday approved a development financial institution to boost investment in infrastructure projects, finance minister said.

"I expect the institution to raise up to 3 trillion rupees ($41.36 billion) in the next few years," Nirmala Sitharaman, India's finance minister told reporters, after a cabinet meeting chaired by Prime Minister Narendra Modi.

In her annual budget for 2021/22 presented on Feb. 1, Sitharaman had proposed to allocate 200 billion rupees for setting up a development finance institution, with a view to partly fund proposed $1.5 trillion in infrastructure projects over the next few years.

($1 = 72.5350 Indian rupees)

(Reporting by Aftab Ahmed and Manoj Kumar and Louise Heavens)