India to Sell Stakes in State-Run Firms, Aims to Raise $8B in Revenues

India, in a bid to support government revenues in light of a deepening and stretching fiscal deficit, plans to sell some of its interests in state-run firms, Dow Jones Newswires reported, quoting an unnamed senior official connected with India's finance ministry.

The sell-out, the official said, will start April 1, with expected earnings placed of at least INR400 billion or $8 billion.

Among the companies which the federal cabinet has already approved to conduct small share sales were Oil & Natural Gas Corp., the Steel Authority of India, NBCC Ltd, Bharat Heavy Electricals and Rashtriya Ispat Nigam Ltd.

Earlier, India had sought to sell stakes in some state-run firms but the weak stock markets prevented it from accumulating its targeted amount. It has so far managed to raise a meager INR11.45 billion this fiscal year through March.

But with a modified share auction rule, the Indian government hopes to collect its target and be able to finally meet its revenue goal for the next fiscal year, the senior finance ministry official said.

"There is no harm in setting an optimistic target... the INR400 billion is possible to do next fiscal year," the official told Dow Jones Newswires.

With the recent share auction rule change, founders are now allowed to sell part of their interests through stock exchanges rather than passing through the typical lengthy public offering procedures. The new rule will definitely help push several stake sales.

"The rule change by the market regulator will help and, to some extent, the share sale target will be less stressful next year," the official said.

The government wants to increase cash in its coffers in anticipation of a slowing economy, when tax revenues were sure to not bring in up contribution either.

The Indian federal government likewise plans to sell portions of its stakes to cash-rich state-run companies, but without giving up majority control in those firms. An example would be selling to Coal India.