Keeping with the pledge to keep its borrowing in check, the government today unveiled plans to remodel the National Investment Fund (NIF), a step seen as reducing government borrowings significantly.
The government has sought Cabinet approval for remodeling the National Investment Fund, a move that comes a little less than five years after NIF came into existence.
The government has already borrowed Rs 3.7 lakh crore in the first half of the current financial year (2012-13) ended September 30, which is about more than 60 per cent of the targetted borrowing, and is under pressure to cut its borrowings.
Among the proposals, the government also plans to disband the portfolio managers for the fund. Initially, three asset management companies - UTI Asset Management Company, SBI Funds Management and LIC Mutual Fund Asset Management Company - were appointed as managers for the fund.
Also, it has been decided that the income from the National Investment Fund would also be used for recapitalisation of banks and for capital investments in public sector undertakings (PSUs).
It was on January 27, 2005, that the government decided to constitute the National Investment Fund into which the realisation from sale of minority shareholding of the government in profitable central public sector enterprises (CPSEs) would be channelised. The fund is maintained outside the Consolidated Fund of India.
Today, besides other things, the government also decided to set up a seperate committee to decide on the utilisation of divestment receipts that are transferred to the fund.
This committee will be headed by the divestment secretary.