These constraints are physical , legal , distributional
constraints and budgetary constraints. The most common physical constraint is
the production function which relates the physical inputs and outputs of a
project. This directly enters into the calculation of costs and benefits. One
of the inputs or some inputs may be in totally inelastic supply. Then the
investment must conform to the legal framework. The legal constraints a rise ,
for instance , from regulated pricing administrative constraints arise from
what can be administratively handled. The distributional constraints arise from
the fact that no section should be unfavorably affected in the matter of income
distribution. It is not always possible to make the gainers compensate the
losers.
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