An important component of the economic reforms launched in 1991 was the reform for Public Sector Units. For the PSUs, the major policy change was the introduction of disinvestment. Here, a part of the PSU’s shares will be disinvested with government keeping custody of the majority shares or 51%. The money obtained from such share selling through disinvestment will be kept with a special fund called National Investment Fund (NIF). The NIF money will be utilized for specific purposes set by the government. Working of the NIF since its inception indicate that in most occasions, the government has utilized the disinvestment revenue in the NIF for capitalizing PSUs. But between the period of 2008 to 2013, bulk (around 75%) of the funds were used to finance social sector expenditure as the tax revenue was inadequate to support these heads in the context of economic slowdown. Formation of the NIF The National Investment Fund (NIF) was set up in November, 2005 for channelizing the proceeds from disinvestment of Central Public Sector Enterprises. The money with the NIF is permanent in nature and NIF is professionally managed to provide returns to the Government, without depleting its value. Selected Public Sector Mutual Funds, namely UTI Asset Management Company Ltd., SBI Funds Management Private Ltd. and LIC Mutual Fund Asset Management Company Ltd have the responsibility to manage the NIF money. Use of the NIF proceeds The money procured through disinvestment has been entered as ‘Other Receipts’ in the budget. Such proceeds and transferred to the NIF. In the past, especially from the difficult times of 2008 onwards around 75 per cent of the NIF money was used to finance social sector schemes and the remaining for capitalization of PSUs. But from 2013-14 onwards, the use of NIF proceeds were changed. In this context, the NIF corpus would be utilized for the following purposes: Subscribing to the shares issued by the CPSEs including PSBs and Public Sector Insurance Companies, to ensure that 51% ownership of the Government in those CPSEs/PSBs/ Insurance Companies, is kept. Preferential allotment of shares of the CPSE so that Government shareholding does not go down below 51% in all cases where the CPSE is going to raise fresh equity. Recapitalization of public sector banks and public sector insurance companies. Investment by Government in RRBs/IIFCL/ NABARD/Exim Bank; Equity infusion in various Metro projects; Investment in Bhartiya Nabhikiya Vidyut Nigam Limited and Uranium Corporation of India Ltd. Investment in Indian Railways towards capital expenditure. From fiscal year 2013-14, the disinvestment proceeds will be credited to the existing NIF which is a ‘Public Account’ under the Government Accounts. The funds would remain there until withdrawn/invested for the approved purposes. During 2015-16, an amount of Rs 29,438.42 crore was utilized through NIF during the previous year for meeting capital expenditure of the Ministry of Railways and recapitalization of Public Sector Banks (PSBs). *********
