Government to take up NIF rejig plan

NEW DELHI: The government is expected to take up a proposal to alter the nature of the National Investment Fund ( NIF), which was initially set up to finance selected social sector schemes and meet the capital investment requirements of profitable and revivable state run firms.

“The NIF money was being used to meet the capital expenditure requirements of selected social sector schemes. We now want it to align with disinvestment policy and proceeds should go towards capitalisation of PSUs, including banks and insurance companies,” he said.

Cabinet Committee on Economic Affairs (CCEA) will deliberate the proposal on Thursday. NIF was set up in 2005 from the proceeds for stake sale in state run companies.

In November 2009, the government had decided to give an exemption for three years to allow divestment proceeds be used for meeting the capital expenditure requirements of selected social sector programmes as decided by the Planning Commission.

The exemption was later extended up to March 2013. Three state run asset management firms – UTI, SBI Funds and LIC Mutual Funds were appointed as fund managers to the mange the funds under NIF.

It is expected that the fund will be brought under the Consolidated Fund of India and the three fund managers will be relieved. The cabinet is also expected to take up the issue of reviving the ailing Scooters India Ltd. The company has been recording operational losses since 2002-03 and net losses since 2006-07.

It was declared sick in March 2009 and referred to the Board for Reconstruction of Public Sector Enterprises (BRPSE).