New Delhi, Aug. 4: The government plans to sell a 3 per cent stake in GAIL (India) Ltd. The sale of the shares in GAIL, whose stock is trading at around Rs 345, is expected to fetch over Rs 1,300 crore.

The department of disinvestment has moved a cabinet note for inter-ministerial consultations on the sale, officials said.

Even a 3 per cent selloff will bring the government's stake to 53 per cent - well above the 51 per cent it plans to hold in key PSUs.

GAIL's balance sheet will improve following the government's decision to exempt it from subsidy to oil marketing PSUs for selling kerosene and cooking gas below cost. However, GAIL's net profit still fell 32 per cent to Rs 424 crore in the first quarter of 2015-16 over the corresponding period of the previous fiscal when profit was Rs 621 crore. LPG and petrochemical output fell, while the PSU had to contend with lower prices.

Net profit was down despite the company not having to pay any fuel subsidy in the current fiscal. In the first quarter of 2014-15, GAIL had paid Rs 500 crore.

GAIL is the fifth oil PSU on the government's divestment list. In June, the department of divestment had floated a draft note to sell 3 per cent in BPCL. The cabinet has already approved the sale of 5 per cent stake in Oil and Natural Gas Corporation and 10 per cent in Indian Oil Corporation. The department plans to sell 10 per cent in Oil India, as well.

Volatile stocks, a slump in the Chinese market and an impending US Fed rate hike has forced the department to tread cautiously and even consider scaling down the divestment target for the current fiscal to Rs 30,000 crore - almost half of the budgeted target of Rs 69,500 crore.

The budget has set a target to raise around Rs 41,000 crore from the sale of the government's minority stakes and Rs 28,500 crore from strategic sales.

Sales in two power entities have received a good response in this fiscal. The government earned Rs 1,550 crore from Rural Electrification, while Power Finance Corporation yielded Rs 1,600 crore.