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National Investment Fund approved

Special Correspondent

75 p.c. of NIF income to fund social sector projects; three-member advisory board proposed

NEW DELHI: The Union Cabinet on Thursday approved the setting up of the National Investment Fund (NIF) and making it operational so as to clear the decks for ploughing of 75 per cent of its income — derived through the disinvestment proceeds of Central public sector enterprises (CPSEs) — for funding social sector projects. The balance 25 per cent is to be utilised for the revival of the ailing PSEs.

"The Union Cabinet has given its approval to the `General Scheme for Operationalisation' of the NIF, creation of a post of Chief Executive Officer for it and constitution of a three-member part-time Advisory Board,'' Information and Broadcasting Minister S. Jaipal Reddy told newspersons here after the Cabinet meeting.

"The proceeds from disinvestment of CPSEs are to be channelised into the NIF, which is to be maintained outside the Consolidated Fund of India. The NIF is to be professionally managed to provide sustainable returns to the Government, without depleting the corpus,'' he said. The public sector mutual funds would be entrusted with the management of the Fund's corpus, he said.

NIF Chief Executive Officer (CEO), who would be administratively attached to the Department of Disinvestment under the Finance Ministry, would formulate the investment strategy.

Tax treaty with Italy

The Cabinet also decided to amend the Double Taxation Avoidance Convention with Italy with a view to boosting trade and investment ties with the European nation.

"The Union Cabinet gave its approval for signing of the protocol amending the Double Taxation Avoidance Convention,'' Mr. Reddy said. Through the protocol for amending the existing convention, the two countries agreed to incorporate their mutual proposals.

The main provisions of the protocol include substitution of local income-tax with a regional tax on productive activities by Italy. It also seeks to broaden the scope of permanent establishment for taxation of services and insurance covers. It covers tax treatment of business profits, air transport and shipping.

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