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,           .