The spectre of rising fiscal deficit has forced the government to look at using disinvestment to fund its big-ticket social sector programmes. The Cabinet will consider tomorrow a Finance Ministry proposal to start using money raised by selling government stake in PSUs for three years until March 2012.

The Cabinet will also discuss selling 5 per cent stake in NTPC. The government has already raised Rs 4,000 crore this year through sale of 10 per cent each in OIL and NHPC.

Money raised through disinvestment is currently parked in the National Investment Fund (NIF), set up in 2004. The first UPA government had decided not to dip into the NIF corpus which, before this year’s stake sales, stood at around Rs 2,000 crore.

With an estimated fiscal deficit of 6.8 per cent of the GDP for 2009-10 looming large, the government is hardpressed to find resources to meet funding requirements of flagship programmes like NREGS. Finance Minister Pranab Mukherjee aims to cut fiscal deficit sharply over the next two years, bringing it to 4 per cent of GDP by 2011-12.