The finance minister has given three weeks time to the chiefs of financial institutions and State Bank of India to prepare the blue print of the proposed mutual fund. The idea was mooted at Thursday's meeting Yashwant Sinha had with the heads of financial institutions and banks in Mumbai. The meeting was attended by the chiefs of IDBI, ICICI, IFCI, IDFC, LIC and State Bank of India.

The mutual fund will be managed by an asset management company which will have 49 per cent holding by the government and the rest by banks and financial institutions. The initial corpus of the mutual fund will be brought in by banks and financial institutions.

"The idea is to have the mutual fund subscribe to the governmentequity that will be divested in specific public sector enterprises. The mutual fund will in turn off-load the equity in the market through public offerings at a later date when the market conditions are conducive," said the head of a financial institution.

Sources said the proposed mutual fund will be in addition to the special purpose vehicle that the ministry of finance is considering to bulldoze through the privatisation process of public sector enterprises despite the dull market conditions.

Later, delivering the 33rd Walchand Memorial Lecture organised by the Maharashtra Chamber of Commerce & Industry, Sinha launched a frontal attack on the "Holy Cows" - small-scale industry, public sector undertakings and subsidies, and hinted at harsh policy decisions to strengthen India for a take-off to the 21st century.

Sinha pointed out that PSU reforms could only generate the pool of funds that is required to fund the country's infrastructure needs.

The finance minister candidly admitted that although hisgovernment is making an attempt to disinvest shares of PSUs blue-chips, the reform process has not yet begun. "There has hardly been any progress on PSU reforms," Sinha said, adding that a national consensus was required so that the government could take such politically-sensitive decisions.

"I fully agree that PSUs played a meaningful role in the past, but now the time has come to dispose off these assets so that newer assets can be created," Sinha said, pointing out that these units are failing to generate enough returns on the huge capital investments that has been made.

The finance minister also hinted at dereservation of SSI units saying that "in today's competitive world, it is difficult to provide protection to SSIs."

India has to open up sectors and stand up to the World Trade Organisation commitments, and no government, Sinha cautioned, can continue with the policy of reservation. "How does such protection find a place, at a time when we are evolving a common market for SAARC," the financeminister wondered.

Sinha appealed to the business and industry ready for the challenges that lie ahead. "Swadeshi is often misunderstood as protection for the inefficient and a perpetual flight from competition. But what it actually teaches us is to be competitive, and take up challenges both from outside and within."

Attacking the "hidden" subsidies in the system, Sinha said that the people have the right to know the exact amount of subsidy. "There are too many hidden subsidies which has created enormous distortions in the economy. People do realise that they should help the deprived sections, but the subsidies need to be explicit," Sinha said.