The government invited bids from bankers on Wednesday to manage sale of 10-per cent stake in iron ore miner National Mineral Development Corporation (NMDC) as it lags in meeting its target of raising Rs 58,425 crore from disinvestment in public sector companies to curtail the fiscal deficit in the current 2014-15 financial year.
Barely two months are left in this fiscal and the government has managed to raise only Rs 1,715 crore through the disinvestment of five-per cent stake in Steel Authority of India Limited.
This is the fifth year in a row that the finance ministry is likely to miss its disinvestment target.
A senior finance ministry official told news agency Reuters that the government would not be able to meet the target. NMDC share sale could fetch Rs 5,490 crore at current market prices ahead of the government's first full-year Budget on February 28.
The government owns 80-per cent stake in the mining company, shares of which were down 1.8 per cent at Rs 138.20 at Wednesday's close. The shares will be sold through an exchange-based bidding platform, the finance ministry said.
The government has also drawn up plans for selling 10-per cent stake in state-run refiner Indian Oil Corporation (IOC) but the issue was not taken up at the Cabinet meeting on Wednesday. The IOC stake is valued at Rs 7,790 crore based on current prices. The shares gained 55 per cent last year but dropped two per cent to close at Rs 330 on Wednesday.
The disinvestment target was heavily dependent on Coal India Limited (CIL) and Oil and Natural Gas Corporation (ONGC), in which it has been trying to sell stakes of 10 per cent and five per cent respectively. The two stakes are roughly worth a combined Rs 39,000 crore on current prices, but divestment has been held up due opposition from labour unions in CIL and plunging oil prices in the case of ONGC.
Upstream oil giants shares have fallen by about 14 per cent since October due to which the government has held back stake sale and decided to disinvest shares in Indian Oil instead.
The finance ministry is also looking at different options, including alternative asset sales and deeper spending cuts to rein in the fiscal deficit.
A finance ministry official said that the government had identified hydropower producer National Thermal Power Corporation and Dredging Corporation as potential candidates for share sales. It has also decided to cut budgeted public spending by up to 20 percent, another ministry official said.
While bureaucratic delays and volatile market conditions derailed the sell-off drive in the past, a purge of the government's top economic policy team contributed to the latest failure to cash in on a big stock market rally.