BackGovt considering ITC, L&T, Axis stake sales to pare deficit
The ministry intends to ask the Cabinet to approve the proposal to meet its target of Rs54,000 crore in total share sales in the year ending 31 March
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New Delhi: India is seeking to revive the option of selling some government stakes in ITC Ltd., Larsen & Toubro Ltd. and Axis Bank Ltd. to raise funds, three finance ministry officials with direct knowledge of the matter said.
The ministry intends to ask the Cabinet to approve the proposal as pressure grows on the administration to meet its target of Rs54,000 crore ($8.7 billion) in total share sales in the year ending 31 March, said the officials. They asked not to be identified as the plans aren’t public.
The officials said a final decision has yet to be taken and didn’t give a time frame for the approval process. The government’s attempt since the end of 2011 to set up a fund management company for the stocks, which would then pledge them as collateral to secure loans, has stalled.
India faces a slump in economic growth that’s hurting tax revenues, adding pressure on the government to sell some of its stake in ITC, Larsen & Toubro and Axis, worth a combined Rs47,400 crore at current prices, to help contain the budget deficit. Prime Minister Manmohan Singh’s goal is to shrink the gap to a six-year low of Rs4.8% of gross domestic product this fiscal year.
Finance minister P Chidambaram aims to sell Rs40,000 crore of shares in state companies in the 12 months ending 31 March and Rs14,000 crore of legacy holdings in private businesses. He’s raised about 3% of the target for disposals in state companies, with just four months of the fiscal year left, according to finance ministry figures.
Budget and trade shortfalls are among risks that imperil India’s investment grade credit rating. Standard & Poor’s said this month it may lower India’s assessment to junk next year unless the general election due by May leads to a government capable of reviving economic expansion. BLOOMBERG
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