Government eyes auctions to meet $5.65 bn stake sale target

NEW DELHI: The government is likely to kickstart stake sales in state-run companies in June - preferably through the auction of shares - to meet a target of 300 billion rupees set for this fiscal year, the official in charge of disinvestment said on Monday.

Along with cutting subsidies, the stake-sale target is seen as key to India's efforts to rein-in the fiscal deficit to 5.1 per cent in the 2012/13 fiscal year, after it blew out to 5.9 per cent last year.

"When you push an FPO (follow-on public offering), the market prices come under pressure. Hopefully, we will go more for ONGC-type auctions," Mohd. Haleem Khan, who heads the government's share sale programme in the ministry of finance, told in an interview.

Although India's $2.6 billion auction of shares in ONGC in March did not attract many institutional investors, the government was able to direct state-run Life Insurance Corp to pick up stake.

Khan defended the ONGC sale, which even some government officials said was badly handled. He said the government got the price it was aiming for.

In the 2011/12 fiscal year, the government raised just 140 billion rupees from share sales in state companies, well short of its 400 billion rupee target.