NEW DELHI: The Christmas gift for the markets from the government will include selling off its remaining 10.27% stake in Maruti Udyog (MUL). It has also called for a meeting of chief ministers to take a call on whether 5% of the existing pension funds could be invested in stock markets and referred the Bill to raise FDI in insurance sector to 49% from the current 26% to a group of ministers.
Finance minister P Chidambaram told reporters on Thursday that the GoM’s decision on the Bill is expected ‘probably within a month’. On the misgivings on the critical clause among the Left parties, he said the Cabinet has to take a decision to introduce the Bill in Parliament before discussions are held.
Mr Chidambaram said the comprehensive insurance amendment Bill could be introduced in Parliament in the first week of the Budget session.The Bill is crucial because it includes amendments to the Insurance Act, 1999, which among other things will notify the hike in FDI cap to 49% from 26% in the sector. Among other changes, the Bill proposes changes to the Insurance Act (1938), LIC Act (1956), General Insurance Business Nationalisation (GIBNA) Act and the Irda Act (1999).
Mr Chidambaram said the GoM would not take more than two sittings to give its views on the matter. “It (GoM) should not take much time since already KP Narasimhan Committee’s report is there, the views of the law ministry are there. It should not take more than two sittings,” he said.
The Cabinet committee on economic affairs (CCEA) also gave the go-ahead for the sale of the government stake in the automobile company, in which the majority stake is held by Suzuki. However, retail investors cannot participate in it. Instead, public and private sector banks and FIs, mutual funds and public sector companies will be eligible to participate in the book-building process.
The CCEA has also reappointed SBI Caps and Kotak Mahindra Capital Co as advisers for the sell off, “as these were appointed by the government of India at a zero fee during the earlier 8% disinvestment of equity”.
Chidambaram said he will take a call on when to invite bids for the selloff, which is expected to fetch Rs 3,000 crore, depending on the stock market conditions. Government managers said the timing would depend on whether the finance ministry would need the funds to balance its budget figures but could be completed before the end of the fiscal.
He said since MUL was a private sector company now, the sale could not be be called a disinvestment and the proceeds need not ‘strictly’ go into the National Investment Fund. The fund is a firewalled entity separated from the consolidated fund of the government. However, he did not rule out the possibility.
The minister said the Cabinet has decided to call a meeting of chief ministers of all states to decide on the investment of pension funds of government employees who are under the New Pension Scheme (NPS).
“Since there is already a notification that spells out the investment pattern for non-government provident funds, we could consider the deployment of these (pension) funds on the same lines,” Mr Chidambaram said.
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