9.16 ndian onom
Affairs) and to supervise/monitor the on the issue of the proposal by the then Finance
implementation process. Minister.49 The proposal regarding the use of the
The disinvestment policy is today seen as a part proceeds of disinvestment was as given below:
of the Government’s comprehensive management Some portions of the disinvestment proceeds
of its investment in the PSUs. Under this, the should be used:
Government considers its investment in PSUs (i) in the divested PSU itself for upgrading
as an important asset for accelerating economic purposes
growth and is committed to their efficient use to (ii) in the turn-around of the other PSUs
achieve optimum return through the following
(iii) in the public debt repayment/pre-
measures:
payment
Leveraging of assets, capital and financial
(iv) in the social infrastructure (education,
restructuring;
healthcare, etc.)
Raising fresh investments by improving
investors’ confidence; and (v) in the rehabilitation of the labour-force
(of the divested PSUs) and
Efficient management through
rationalization of decision making (vi) in fulfilling the budgetary requirements.
process. Phase III: Two major developments of this phase
are as given below:
ProceeDs of Disinvestment: DebAte concerning 1. National Investment Fund: In January
the use 2005, the Government of India decided
In the very next year of disinvestment, there started to constitute a ‘National Investment
a debate in the country concerning the suitable Fund’ (NIF)50 which has the following
use of the proceeds of disinvestment (i.e., accruing salient features:
to the government out of the sale of the shares in (a) The proceeds from disinvestment
the PSUs). The debate has by now evolved to a will be channelised into the NIF,
certain stage coming off basically in three phases: which is to be maintained outside the
Phase I: This phase could be considered from Consolidated Fund of India.
1991–2000 in which whatever money the (b) The corpus of the National Investment
governments received out of disinvestment were Fund will be of a permanent nature.
used for fulfilling the budgetary requirements (c) The Fund will be professionally
(better say bridging the gap of fiscal deficit).48 managed, to provide sustainable
Phase II: This phase which has a very short span returns without depleting the
(2000–03) saw two new developments. First, the corpus, by selected Public Sector
government started a practice of using the proceeds 49. It was proposed by Yashwant Sinha and thus got
not only for fulfilling the need of fiscal deficit but popularity as the ‘Yashwant Formula’ of using
used the money for some other good purposes, disinvestment proceeds. Being his personal proposal,
the overnment of the time was not officially ound
such as—re-investment in the PSEs, pre-payment to it. However, the idea got support inside and outside
of public debt and on the social sector. Second, of the Parliament and looked having an impact on the
by the early 2000–01 a broad concensus emerged government’s thinking about the issue.
. Ministry of Finance, Disinvestment Policy
48. Ministry of Finance, Various issue of the Economic Announcement, epartment of isinvestment ew
Survey ew elhi overnment of ndia . elhi overnment of ndia, .