India plans to accelerate sales of state companies to meet the financial year goal of Rs 40,000 crore ($7.4 billion) by December, two finance ministry officials with direct knowledge of the matter said.
The government wants to wrap up the stake sales before elections are announced, one of the people said. Policy makers want to take advantage of a rebound in stocks for better valuations, the other person said. The officials asked not to be identified because they aren't authorised to speak on the subject. Indian national elections are due by May 2014.
In the financial year year through March, the government plans to reduce its holdings in Coal India Ltd, National Aluminium Co, Rashtriya Ispat Nigam Ltd, Indian Oil Corp, Power Grid Corporation of India and Bharat Heavy Electricals Ltd. Finance Minister Palaniappan Chidambaram is counting on revenue from shares of government-controlled companies to narrow the budget deficit and maintain an investment-grade credit rating after a similar program fell 20 per cent short of target last year.
The benchmark S&P BSE Sensex index has jumped nine per cent from a seven-month low reached on April 9 as the central bank cut interest rates three times this year to revive economic growth from the slowest pace in a decade.
Starting September, Prime Minister Manmohan Singh's administration has taken steps to boost economic growth by reducing energy subsidies, allowing more foreign investment in industries including aviation and retail and cutting levies on capital inflows.
Missing goal
The asset-sale program fell short of its Rs 30,000 crore target in the year ended March 31, with the government managing to raise only 80 per cent, according to data provided by the finance ministry. D S Malik, the New Delhi-based spokesman at the ministry, declined to comment.
The yield on the benchmark 8.15 per cent government bond due June 2022 slipped one basis point, or 0.01 percentage point, to 7.73 per cent as of 11:10 am in Mumbai. The rupee was little changed at 54.115 a dollar.
