Panel Wants Selloff Proceeds Placed In Separate Fund

The proceeds from disinvestment of government stake in public sector undertakings (PSUs) should be separated from other non-debt receipts of the government and placed in a separate fund called the disinvestment fund, suggests the Disinvestment Commission.

It has also recommended that the National Renewal Fund (NRF) should be merged with this fund and should be administered by the finance ministry.

Since the disinvestment proceeds are receipts into the budget, which is administered by the finance ministry, the expenditure incurred out of the proceeds should also be managed by it, commission chairman G V Ramakrishna has said.

At present, the National Renewal Fund is under the administrative control of the industry ministry, while the financial support for the scheme comes out of the budget.

 

Experts believe that this is one reason why the scheme has not taken off and the budgetary allocation for NRF has been scaled down over the years from around Rs 1,000 crore at the time of its inception to about Rs 250 crore now.

In its report, the commission has sought separation of the disinvestment proceeds from other non-debt capital receipts into the budget.

If the disinvestment proceeds from the profit-making units in the first few years are used to revive and prepare potentially viable, but currently loss-making, units for eventual disinvestment, this will eliminate the recurring draft on the budget and make a net positive contribution to it in the long run.

Additionally, this link would also help establish the credibility of the disinvestment process, the report said.