No matter the storm over selling government stake in profit-making public sector enterprises, the divestment department has decided to go ahead with the Cabinet note for bringing the national investment fund into effect.

The fund that was set up in January 2005 will receive the proceeds raised through PSE divestment. The amount will be used to finance selected social sector schemes and for investment in PSEs that are profitable, and can be revived.

The Divestment Development

But the proceeds from divestment will first go to the consolidated fund of India before being earmarked for the NIF, finance ministry officials said.

Officials at the divestment department said the main objective was not to "kick-start" the fund, but to begin the process of divestment, keeping in mind the larger issue of running the public sector more efficiently.

The only proposal the department is considering at present is that of Bhel's, said an official. The other proposals in the pipeline include disinvesting the government's residual stake in Maruti Udyog Ltd [Get Quote].

But officials admitted that the divestment department lacked a road map and clarity as far as divestment was concerned.

Meanwhile, replying to a question in the Lok Sabha, the government has confirmed that it has decided on an "offer for sale" of 10 per cent of its 67.72 per cent equity in Bhel through the book-building process.

Up to 15 per cent of the equity offered on sale will be reserved for the employees of Bhel. Allocation of shares to retail investors will be in accordance with Sebi norms.

Funding matters

• To finance selected social sector schemes and for investment in PSEs that are profitable, and can be revived
• To begin the process of divestment, keeping in mind the larger issue of running the public sector more efficiently
• 10% of government's 67.72% equity in Bhel to be divested through the book-building process. 15% of the equity offered on sale reserved for the employees of Bhel.