Finance minister to meet top officials today to discuss strategy.
The government may realign operation of the National Investment Fund (NIF) with the disinvestment process as had originally been envisaged.
A senior finance ministry official told Business Standard that finance minister Pranab Mukherjee would meet senior officials tomorrow, including economic affairs secretary R Gopalan, on the issue.
The government decided to constitute the NIF on January 27, 2005, to keep realisations from sale of its minority shareholdings. The money was to be maintained outside the government’s consolidated fund and is professionally managed — by public sector mutual funds — to provide sustainable returns without depleting the corpus.
The return from the fund, without touching the corpus, was to be so used that 75 per cent of it financed selected social sector schemes and 25 per cent met capital investment requirements of profitable and revivable central public sector enterprises (CPSEs).
However, in view of the difficult economic situation caused by the global slowdown of 2008-09, the government decided in November 2009 to use the proceeds of divestments for selected social sector programmes. This rerouting was to be from April 2009 to March 2012, after which the money was to go back to the NIF.
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The NIF corpus at the time of the change was Rs 1,815 crore, proceeds from disinvestment in Power Grid Corporation and Rural Electrification Corporation. The Power Grid share sale was completed in October 2007 and government realised Rs 995 crore. The REC share sale, in March 2008, gave Rs 820 crore. The payout on NIF was Rs 84.8 crore in 2008-09, Rs 249 crore in 2009-10 and Rs 110.6 crore in 2010-11.
Receipts from disinvestment in 2009-10 and 2010-11 were Rs 23,553 crore and Rs 22,763 crore, respectively. Against the budget target of Rs 40,000 crore this year, the government has realised only Rs 1,144.55 crore from disinvestment in Power Finance Corporation.
The Cabinet is likely to soon clear an extended disinvestment framework under which bulk sale and buyback of government stakes in CPSEs would be allowed to government institutions and companies.