Press Information Bureau

Government of India

Ministry of Finance

27-March-2012 18:31 IST

The disinvestment of 10 per cent Government of India shareholding in NALCO is under active consideration of the Government.

The draft proposal has been sent to various ministries including the Ministry of Mines for their comments. The comments from the Ministry of Mines are awaited. Under the prevailing guidelines, for disinvestment of Government of India share holding in CPSEs, the comments of the State Governments are not envisaged.

The disinvestment proceeds are channelized into National Investment Fund (NIF) and income from the Fund is used for investment in social sector projects and capital investment in selected profitable/revivable Public Sector Enterprises in order to enlarge their capital base to finance expansion/diversification. In view of the different economic situation caused by the global slowdown of 2008-09 and a severe drought that could adversely affect the 11th Plan growth performance, Government in November 2009 decided to give exemption for utilization of proceeds from disinvestment of CPSEs for a period of three years – from April 2009 to March 2012 – i.e. disinvestment proceeds during this period would be available in full for investment in specific social sector schemes decided by Planning Commission/Department of Expenditure. The same has now been extended by another one year, i.e. from April 2012 to March 2013. However, the existing corpus of the NIF shall remain untouched and continue to be managed by the Fund Managers.

The disinvestment proceeds are being used for funding the capital expenditure under the social sector schemes of the Government.

This information was given by the Minister of State for Finance, Shri S.S. Palanimanickam in written reply to a question in Rajya Sabha today.

DSM/SS/Hb

Disinvestment policy directs sale of public CPSE shares with proceeds routed to social sector and capital investments. Disinvestment of a portion of Government shareholding in a CPSE is being considered with draft proposals circulated to ministries and no State consultation required; proceeds are routed to the National Investment Fund, whose income finances social sector schemes and capital investment in selected Public Sector Enterprises. A temporary exemption allowed full use of disinvestment receipts for specified social sector schemes for a multiyear period and has been extended, while the NIF corpus remains untouched and managed by fund managers; proceeds are being used for capital expenditure under social sector schemes.