In keeping with its ongoing efforts to streamline the disinvestment process, the government transferred the role of advising the government on how to utilise the proceeds from disinvestment from the Department of Investment and Public Asset Management (DIPAM) to the Department of Economic Affairs.
This comes days after the Union Cabinet approved an alternative mechanism to decide the modalities to do with stake sales in public sector undertakings (PSUs), so as to speed up the process.
According to a notification issued by the Cabinet Secretariat changing the Allocation of Business rules, the Department of Economic Affairs in the Finance Ministry will now be in charge of “financial policy in regard to the utilisation of the proceeds of disinvestment channelised into the National Investment Fund.”
“This is not an unusual decision, since it keeps the role within the same Ministry,” a former Finance Secretary told The Hindu on condition of anonymity.
“It would have been unusual if the role had been shifted to another Ministry altogether. But as it is, it seems to be streamlining the process because the Department of Economic Affairs is in charge of budget-making, which includes deciding what to do with the proceeds from disinvestment.”
During his Budget speech 2016-17, Finance Minister Arun Jaitley had announced renaming the previously known Department of Investment as DIPAM.
The Centre had created a National Investment Fund in 2005 in which the proceeds from the disinvestment of Central Public Sector Enterprises (CPSEs) were to be channelised.
“The Cabinet Committee on Economic Affairs, chaired by the Prime Minister Shri Narendra Modi has given its approval to Alternative Mechanism, who would decide on the quantum of disinvestment in a particular Central Public Sector Undertaking (CPSE) on a case-by-case basis subject to Government retaining 51 percent equity and management control,” according to a statement issued after the decision was taken.