Govt May Defer Stake Sale Fund

National Investment Fund (NIF) is being delayed by two years – so that GoI gets to keep disinvestment proceeds in the Consolidated Fund of India (CFI).

The NIF was created in 2005, under Left party pressure which had objected to using disinvestment proceeds to bridge the fiscal deficit.

75% of NIF’s annual income is earmarked to finance selected social sector schemes and the rest for capital investment in profitable and revivable central PSUs.

The fund became operational only in 2007 and UTI AMC Ltd, SBI Funds Management Co Pvt Ltd and Jeevan Bima Sahayog AMC Ltd were designated fund managers.

Pending Cabinet approval of NIF's deferment, Rs4200 Cr from the recent sale of equity in two PSUs Oil India Ltd and National Hydroelectric Power Corporation Ltd, will flow into the fund.

The Budget had estimated Rs 1,120-crore from disinvestment – a figure comfortably crossed with OIL alone giving Rs 2,200 crore to the government.

In the first phase, the government is expected to offload equity in companies that have less than 10% floating equity. The likely candidates are Rural Electrification Corporation, State Trading Corporation, Bharat Sanchar Nigam, Coal India Ltd, Engineers India Ltd and National Mineral Development Corporation.

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