In a bid to restart disinvestment policy stalled by allies of the government, Finance Minister P. Chidambaram said that the cabinet has approved the offload of a small part of its holding in three public sector power companies. Chidambaram said that this form of disinvestment which is projected to net Rs. 1,500 crore (USD 340 million) is not a "standalone" one and hence is not "disinvestment per se." Apparently, Chidambaram is trying to avoid the D-word lest it brings on a host of protests and threats from communists and regional allies.

The proceeds of this "disinvestment" is not "for revenue expenditure or current expenditure" and instead will go into to the National Investment Fund (NIF). The three companies that will benefit from private investment are Rural Electrification Corporation Limited (REC), Power Grid Corporation of India Limited (PGCIL), and the National Hydroelectric Power Corporation Limited (NHPC). Approved by the Cabinet Committee on Economic Affairs (CCEA), the government has decided to offload 10 per cent of REC and five per cent each in PGCIL and NHPC.

Simultaneously, these three companies will also be making an initial public offering (IPO) to raise money for their projects. Together, they hope to net Rs. 2,400 crore (USD 545 million). Even after the IPO and the "disinvestment," the government will continue to hold 81.22 per cent of REC and 86.36% of the other two.

The government had mooted the NIF as a vehicle that will be used to fund the restructuring and reorganization of public sector units, most of which are bankrupt and make loss. Some of this fund will also be used to meet social sector requirements but there are no programs listed to benefit from this fund. So far, all plans for disinvestment has been stopped either by the communists (Bharat Heavy Electricals) or regional allies (Neyvelli Liginite Corporation) and no money has gone into this fund.