Divestment earnings will not fund capex from March '12

Interests on earnings will be spent on govt schemes and bolstering public sector enterprises

PTI | August 19, 2011



Finance minister Pranab Mukherjee on Friday said he would not seek proceeds from disinvestment to meet capital expenditure needs beyond March 2012, despite facing difficulties due to the global economic situation.

"I would not like to seek a further extension even though I am in a difficult situation," Mukherjee said replying to supplementaries during question hour in the lok sabha.

In November 2009, the government had granted one-time exemption to utilise the proceeds from disinvestment of central public sector enterprises (CPSEs) for meeting capital expenditure requirements of selected social sector programmes.

The proceeds from disinvestment are channelised to a national investment fund (NIF), set up in 2005. Seventy five percent of the interest generated from the fund would be used to finance selected social sector schemes, which promote education, health and employment.

The remaining 25 per cent would be used to meet capital investment requirements of profitable and revivable CPSEs.

Mukherjee said no deposits were made to NIF from 2009-10 to 2011-12. During this period nearly Rs 48,000 crore have been realised through disinvestment of CPSEs.

He made it clear that the government would not let its equity below 51 per cent in any of the CPSEs.

Mukherjee said government has already approved disinvestment of five per cent paid up equity capital of Oil and Natural Gas Corporation Limited and Steel Authority of India Limited.

He said approval has been granted for disinvestment of 10 per cent paid up equity capital of Hindustan Copper Limited and National Building and Construction Corporation Limited.

The disinvestment of HCL and SAIL is in conjunction with the issue of fresh equity of 10 per cent and five per cent respectively.

Proposals for disinvestment of five per cent paid up equity capital of Bharat Heavy Electricals Limited and 10 per cent of National Aluminium Company Limited are at various stages before seeking government approval, Mukherjee said.

The minister said the budget estimates for disinvestment proceeds are Rs 40,000 crore for 2011-12.

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