The government of India has decided to launch the National Investment Fund comprising proceeds from disinvestments of Public Sector Units (PSUs) after two years of approval for its creation. According to the report, the finance minister P Chidambaram is liley to attend the signing of pacts among Unit Trust of India, Life Insurance Corporation of India and the State Bank of India.

All the three financial institutions would be ensured to invest the funds collected from sales of Government shares in state-run companies into the mutual fund business. The sole purpose behind the practice is to generate income for the government to use funds in the implementation of social sector programs.

Earlier in January 2005, the government had approved the formation of the National Investment funds and now, the Cabinet Committee on Economic Affairs finally given the green signal to the working of the fund from now. The fund received money from the disinvestments of government equity in National Hydroelectric Power Corp, Power Finance Corp and PowerGrid Corporation of India.

Now, the government has also planned to create a ‘non-depleting fund’ that would be managed by the mutual funds of three financial institutions through investment in capital markets to raise funds. According to the report, the 75 per cent of the income would go to the projects of education, healthcare and employment in social sector. The rest of 25% oe the funds would be used to revive the sick Public Sector Units.

Read