India’s Finance Minister Palaniappan Chidambaram plans to raise at least 25 billion rupees ($468 million) selling a stake in the nation’s second-biggest state crude oil explorer in an attempt to cut the budget deficit.
A panel of ministers approved the sale of a 10 percent stake in Oil India Ltd., Oil Secretary G.C. Chaturvedi told reporters in New Delhi today. The sale will be held on Feb. 1. The minimum price for the shares will be communicated to stock exchanges after the close of trading tomorrow, he said.
Prime Minister Manmohan Singh and Chidambaram from September started a series of measures including allowing foreign investment in supermarkets and raising diesel prices in an attempt to boost growth, cut subsidies and avoid a downgrade of the nation’s debt rating. The government has raised 67.6 billion rupees, or 23 percent of its share-sale target for the year ending March 31, according to data compiled by Bloomberg. Sales are planned in companies such as electricity producer NTPC Ltd. and Steel Authority of India Ltd.
Oil India declined 2.3 percent to 526.35 rupees at the close in Mumbai today. The shares have surged 13 percent this year, outperforming a 3 percent gain in the benchmark Sensitive Index.
The stock increased after a panel led by Chakravarthy Rangarajan, chief of the prime minister’s Economic Advisory Council, last month recommended natural gas prices in India be linked to overseas rates. If the proposal is accepted, prices will double and help explorers including Oil India, Oil & Natural Gas Corp. and Reliance Industries Ltd.
The government raised 58.3 billion rupees selling a 10 percent stake in NMDC Ltd. last month, the third-biggest share sale in India in 2012, according to data compiled by Bloomberg.
The government owns a 78.4 percent stake in Oil India, according to data compiled by Bloomberg.
Chidambaram plans to narrow the budget deficit to 5.3 percent of gross domestic product this financial year, compared with 5.8 percent last year. The government raised train fares and diesel prices this month to help reduce the shortfall.
Asia’s third-biggest economy will expand 5.5 percent in the year through March 2013, less than an earlier estimate of 5.8 percent, the Reserve Bank of India said this week. That would be the slowest pace since 2003.