The Y V Reddy headed 14th Finance Commission has made a case for the States to get a share in the disinvestment proceeds of central public sector enterprises.

The sharing of the proceeds of disinvestment -- even marginal -- will, in addition to rewards, also ensure a more active interest in State Governments in the disinvestment process, the commission has said.

"We find considerable merit in the Union Government dispensing a small share of proceeds of disinvestment to the States," said the commission report tabled in Parliament on Tuesday.

In the case of central public sector enterprises with multiple units located in different States, the distribution of this share could be uniform across all the States where the units are located.

In cases where vertical unit-wise disinvestment is done, the share could go to the State/States where the units being disinvested are located, the commission report said.

Wind up NIF

The 14th Finance Commission has also suggested that the 'National Investment Fund' (NIF) in the Public Account be wound up in consultation with the Comptroller & Auditor General of India and Controller General of Accounts.

The NIF, at present, serves no purpose other than routing the disinvestment receipts through the Public Account for limited accounting needs, the report said.

The 14th Finance Commission has suggested that all disinvestment receipts be maintained in the consolidated fund for utilisation on capital expenditure.