As much as Rs 30,000 crore could be available to the government after the Cabinet today made it mandatory for all listed and profitable public sector undertakings (PSUs) to have a minimum public float of 10 per cent. And decided to list all unlisted PSUs which made profits during the past three years. In a major policy shift, the Cabinet also decided to mend rules that will allow the government to dip into the disinvestment corpus and fund its ambitious social sector programmes.

The decision to use the money raised from stake sale in PSUs will help the government tide over the immediate crisis on the fiscal front. A high fiscal deficit, estimated at 6.8 per cent of the gross domestic product in 2009-10, had posed huge challenges for the government, forcing it to borrow more from the market, and threatening to undermine the growth prospects in the medium term.

Such a massive divestment of government stake in listed and unlisted PSUs would not only bring huge volumes to the trading activity at stock exchanges, deepen the market and broaden its base but also lend flexibility to the government to continue spending on big-ticket schemes such as National Rural Employment, National Rural Health Mission and Pradhan Mantri Gram Sadak Yojana.

“The corpus comprising deposits from April 2009 till March 2012 would be available in full for investment as capital expenditure in specific social sector schemes determined by Planning Commission and Department of Expenditure. The status quo ante of NIF will be restored from April 2012,” the official communiqué stated after the Cabinet meeting on Thursday.

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