The Centre is fast-tracking efforts to sell stakes in some of its largest public sector companies, including Life Insurance Corporation, as New Delhi looks to bolster public finances strained by high oil prices in the aftermath of the West Asia War.
Apart from the nation’s largest insurer, Hindustan Zinc Ltd and several state-controlled banks are among eight companies identified by officials for stake sales in the coming months, people familiar with the matter told Bloomberg.
A share-sale in LIC alone may raise as much as ₹10,000 crore, while the HZL stake sale could fetch another ₹5,000 crore for the government, according to earlier estimates.
Officials overseeing the stake-sale programme have been holding weekly meetings with investment bankers to gauge investor demand, determine pricing and finalise timelines for future offerings, said the people. They also said more bankers are being hired to prepare additional state-run companies for future sales.
Authorities are also considering inviting fresh bids and lowering the reserve price for the sale of a majority stake in IDBI Bank Ltd, after an earlier attempt was stalled by weak buyer interest. The fresh bids will be limited to those who participated in the previous round of the sale, they said.
A spokesman for the ministry of finance did not respond to a request for comment to Bloomberg.
The Centre has so far raised ₹18,561 crore through offers for sale in six entities, such as Central Bank of India, Coal India, NHPC, NLC India, GIC and IRFC. Separately, it also raised ₹6,367 crore from asset monetisation under the Infrastructure Investment Trust (InvIT). Put together, the Modi government has raised ₹24,928 crore through divestment and asset monetisation as against the full-year target of ₹80,000 crore envisaged in the FY27 Budget.
The government’s move assumes significance in the backdrop of a likelihood of the expenditure exceeding the budget estimates in the wake of higher energy and fertiliser import prices due to the West Asia crisis.
According to government accounts, the fiscal deficit stood at over ₹1.62 lakh crore or 9.6 per cent of the FY27 Budget target in the first two months of the fiscal.
While net tax revenues were at 12.1 per cent of the full year budget target till May, miscellaneous capital receipts were 17 per cent of the budgeted target.
Revenue and capital expenditure, on the other hand, were at 15.3 per cent and 20.5 per cent of the full-year budget target at the end of May.
Garnering budgeted revenues would be key to addressing the stress related to the likely doubling of the fertiliser subsidy bill to about ₹3 lakh crore and crude oil imports amid the West Asia crisis, and the impact of the El Niño on the monsoon. The government has set a 4.3 per cent fiscal deficit target for FY27.
A wave of equity offerings from the government and private sector may test investor appetite after foreign funds pulled a net $29 billion from Indian stocks in the first half, contributing in part to a near 9 per cent decline in the benchmark Nifty 50 index.