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Cong govt changed character of US-64: Jaitley

Union Law Minister Arun Jaitley on Thursday said that the decision of the then Congress government (post-1992) to change the character of the US-64 scheme from a debt-based fund to an equity-linked one was largely responsible for the crisis facing the UTI's flagship.

Intervening in the debate on an adjournment motion on the UTI muddle, the minister said till 1992 the US-64 scheme was a debt-related fund with only 28 per cent of funds being invested in equity-linked schemes.

However, between 1992 and 1996, 66 per cent of the funds of US-64 were invested in equity-linked schemes, rendering it vulnerable to market fluctuations.

He said that in 1992, the total investment in the equity-linked schemes was Rs 29.05 billion and the character of the scheme continued to be that of a debt-related fund.

Between 1992 and 1998, equity exposure went up to Rs 136.45 billion making the performance of the scheme dependent on the vagaries of the market, Jaitley said.

Another factor that contributed to the poor performance of the scheme was the investment of Rs 45.72 billion for buying shares of PSUs which the government had divested.

To compound the situation further, the board of US-64 went on declaring dividends for three consecutive years, which were not in consonance with the performance of the scheme, Jaitley said.

He said that there may be bona fide decisions, which turned out to be erroneous. He further said that the board of directors of US-64 was a totally autonomous body and the government did not have powers to issue directives.

There may be cases of individual culpability, which will have to be investigated, he said.

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