Mumbai: The Narendra Modi government plans to pare its stake in Indian Oil Corp. (IOCL)to under 51% while ensuring that the government and state-owned companies retain control of IOCL, people with knowledge of the matter said.
According to a Bloomberg report, the cabinet will consider, as early as next week, a proposal to sell shares in some companies, including Indian Oil, to below 51%, the people said, asking not to be identified as the plan is not public.
The government directly holds 51.5% in Indian Oil, and another 25.9% through state-run Life Insurance Corp. of India, and explorers Oil & Natural Gas Corp. and Oil India Ltd.
The Government can sell as much as 26.4% its holding in Indian Oil -- valued at about 330 billion rupees -- and still retain indirect control.
Sluggish revenue collections has left Modi’s administration with little choice but to push ahead with a plan to raise a record 1.05 trillion rupees through asset sales in this financial year.
A slippage will put the government’s goal of capping its budget deficit at 3.3% of GDP at risk, and prompt rating companies to put India’s credit score on a path for a downgrade to junk.
