Disinvestment proceeds to fund PSUs, banks, insurers: FinMin
New Delhi: The disinvestment proceeds from 2013-14 fiscal will also be utilised to infuse capital into PSUs, banks and insurance companies, Parliament was informed on Tuesday.
"The government has decided that the disinvestment proceeds with effect from the fiscal year 2013-14 ... Will be used for subscribing to the shares being used by the central Public sector enterprises (CPSEs), including public sector banks and public sector insurance companies," Minister of State for Finance Namo Narain Meena said in a written reply in the Rajya Sabha.
The proceeds from disinvestment would be credited to the National Investment Fund (NIF), which was set up in 2005.
Also, the fund will be used for preferential allotment of CPSE shares to promoters so that government holding does not go down below 51 percent.
As much as 75 percent of the income from NIF is used to finance selected social sector schemes, while the rest is utilised to meet the capital investment requirements of profitable and revivable central PSUs.
However, because of the difficult economic situation caused by global slowdown, the government in November 2009 decided to utilise proceeds from disinvestment only for social sector spending. This exemption is applicable till March this year.
As on August 31, 2012 the corpus in the NIF was Rs 1,814.45 crore.