The government On Thursday decided to set up a National Investment Fund comprising proceeds from divestment of public sector units. It will come into effect from April 01, 2005.

In a meeting of Cabinet Committee on Economic Affairs it was decided that the fund money would be spent on the social sector and revival of public sector units.

Briefing newspersons in New Delhi, Finance Minister P Chidambram said the issue of divestment in BHEL was also on the agenda but could not be taken up as the discussion on formation of National Investment Fund took a lot of time.

The Divestment Development: Complete Coverage

"The funds will be initially managed by public sector fund managers like LIC [Get Quote] Mutual Fund, UTI Mutual Fund and SBI [Get Quote] Mutual Fund," Chidambram said.

He observed that when in opposition the left parties and other parties constituting United Progressive Alliance criticised the National Democratic Alliance government for using the proceeds from divestment of PSUs for current expenditure.

"Public sector fund managers will manage and invest the earnings from divestment of public sector units. These returns will then be invested in social sectors like education, health and employment generation and for revival of sick PSUs," Chidambram said.