India 2018

260 India 2018
To promote people's ownership of Central Public Sector Enterprises (CPSEs) to
share in their prosperity through disinvestment; enables efficient management
of public investment in CPSEs for accelerating economic development and
augmenting Government's resources for higher expenditure: the process of
listing of CPSEs on stock exchanges facilitates development and deepening of
capital market and spread of equity culture; helps raise budgetary resources of
the Government.
Salient Features of Current Disinvestment Policy
The policy on disinvestment has evolved considerably. The salient features of
the policy include: (a) public sector undertakings are the wealth of the Nation
and to ensure this wealth rests in the hands of the people, promote public
ownership of CPSEs; (b) while pursuing disinvestment through minority stake
sale in listed CPSEs, the Government will retain majority shareholding, i.e. at
least 51 per cent of the shareholding and management control of the Public
Sector Undertakings; and (c) strategic disinvestment by way of sale of substantial
portion of Government shareholding in identified CPSEs upto 50 per cent or
more, alongwith transfer of management control.
National Investment Fund
Government constituted the National Investment Fund (NIF) in 2005 into which
the proceeds from disinvestment of Central Public Sector Enterprises were to
be channelized. The corpus of NIF was to be of a permanent nature and NIF
was to be professionally managed to provide sustainable returns to the
Government, without depleting the corpus. Selected Public Sector Mutual Funds,
namely UTI Asset Management Company Ltd., SBI Funds Management Private
Ltd. and LIC Mutual Fund Asset Management Company Ltd. were entrusted
with the management of the NIF corpus. As per this Scheme, 75 per cent of the
annual income of the NIF was to be used for financing selected social sector
schemes which promote education, health and employment. The residual 25
per cent of the annual income of NIF was to be used to meet the capital
investment requirements of profitable and revivable PSUs.
In view of the difficult economic situation caused by the global slowdown
of 2008-09 and a severe drought in 2009-10, Government approved a change in
the policy for utilization of Disinvestment proceeds by granting a one-time
exemption to utilize the disinvestment proceeds directly for selected social sector
schemes allocated by Department of Expenditure/Planning Commission. In
order to align the NIF with the Disinvestment Policy, Government decided that
the disinvestment proceeds, with effect from the fiscal year 2013-14, will be
credited to the existing NIF which is a public account under the Government
Accounts and the funds would remain there until withdrawn/invested for the
approved purposes.
It was also simultaneously decided that the NIF would be utilized for the
following purposes: subscribing to the shares being issued by the CPSE on rights
basis so as to ensure that 51 per cent ownership of the Government in CPSEs is