Govt to sell stakes in SAIL, IOC, and other prize PSUs

CROWN JEWELS Auction could raise ~34,500 cr for infra, social projects, crucial for govt to meet fiscal deficit target

NEW DELHI: The government will sell stakes in seven blue-chip state-run companies, including Indian Oil Corp and Steel Authority of India, as it looks to raise cash to fund its ambitious infrastructure and social projects.

The sales could fetch the government ~34,500 crore at the last closing price of their stocks.

The finance ministry invited merchant banks and legal advisers on Monday to help with the share sales that are also crucial for the government to meet the fiscal deficit target of 3.2% of GDP in 2017-18. The government aims to raise ~72,500 crore from disinvestment during the period.

The companies listed for part sale include the National Thermal Power Corp, Rural Electrification Corp, Power Finance Corp, Neyvelli Lignite Corp and hydro power company NHPC.

The government will sell the stakes through the offer-for-sale route, meaning by auction on stock exchanges. The list of companies is in addition to at least 11 state-owned firms that will be listed on the bourses this year.

India needs investments of ~65,00,000-crore in the five years to 2019 to build roads, ports, air- ports and power stations as it seeks to expand its economy and raise living standards.

The government hopes private companies will contribute half the amount, but much of this can probably come only from stake sales in blue-chip state firms.

So far the government has struggled to raise enough private money, with at least ~65,000-crore worth of road projects stuck because of difficulty in obtaining land. Many power projects remain unfinished owing to regulatory delays. The government has also signalled it wants to ease up on cutting the fiscal deficit to be able to spend more on rural areas as it seeks to lift growth and assuage people’s pain from the government’s drive to purge the economy of black money and corruption.

Some of the firms named on Monday were listed for stake sale in the last financial year too but the programme faltered due to adverse market conditions, forcing the government to revise down its fund-raising target to ~45,000 crore.