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Govt announces Rs 5-bn bailout package for UTI

The government announced a Rs 5-billion bailout package for beleaguered Unit Trust of India as part of Rs 80.07 billion supplementary demands for grants for this financial year.

Introducing the first batch of supplementary demands for grants in the Lok Sabha, Minister of State for Finance Gingee Ramachandran said it would involve a cash outgo of only Rs 39.13 billion as the additional expenditure is matched by savings by concerned departments and enhanced receipts and recovery totalling Rs 40.94 billion.

The Rs 5-billion budgetary support provided for UTI is to meet the shortfall between assured repurchase price and net asset value of its flagship scheme US-64.

Unit Scheme-64 was converted to NAV basis on January 1, 2002. Assured repurchase price for specified number of units was announced by UTI on June 30 last year.

The Rs 5-billion provision would enable UTI to meet the shortfall between assured repurchase price and NAV and to provide smooth transition to NAV based scheme.

The cash-strapped UTI requires about Rs 80 billion for redemption of various schemes, including MIP-97-II (Monthly Income Plan), which is maturing on August 31.

The UTI might require yet another bailout package at that point of time.

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