New Delhi: India will likely give up direct control of its most-profitable state-run behemoths as Prime Minister Narendra Modi seeks to keep budget deficit in check, while reviving investments to spur economic growth.
The government has identified the biggest energy companies such as Oil & Natural Gas Corp, Indian Oil Corp, NTPC Ltd. and GAIL India Ltd as probable candidates for cutting its direct holding to below 51%, Atanu Chakraborty, who steers Modi’s asset sale department, said in an interview in New Delhi. “Government’s indirect holding, through arms such as Life Insurance Corp. of India, will stay above 51%."
Finance Minister Nirmala Sitharaman last week set a record ₹1.05 trillion ($15 billion) asset sales target in the year started April 1, while proposing to raise taxes on the wealthy, extract higher dividends from the central bank and increase duties on gold and gasoline to boost revenue and lower the budget gap to 3.3% of gross domestic product.
The proposal to lower direct holding in some state-run companies below 51% was also part of Sitharaman’s budget proposals, which she said would be considered on “case-to-case basis."
“Some of these will happen this year," Chakraborty said. “Exchange-traded fund is the most attractive route for the stake sales."
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