India Said Close to Select Goldman for Exchange-Traded Fund

India is close to appointing Goldman Sachs Group Inc. to manage an exchange-traded fund that will include companies part-owned by the government, said three people with knowledge of the matter.

The selection of New York-based Goldman’s asset management unit is awaiting approval from Indian Finance Minister Palaniappan Chidambaram, said one of the people, who asked not to be identified as the process is private. It will then go to the Cabinet Committee on Economic Affairs, this person said.

An aide to President Pranab Mukherjee said in September that India was working on an exchange-traded fund that tracks state-owned companies, as the government seeks to attract money to its stock market. Officials haven’t decided which stocks will be included in the fund, one person said.

D.S. Malik, a spokesman for India’s finance ministry, and Edward Naylor, a spokesman for Goldman Sachs in Hong Kong, declined to comment.

“The government is currently not able to find quality investors or get a good price when they sell shares in the market,” said Deven Choksey, managing director at K.R. Choksey Shares & Securities Pvt. in Mumbai. “They intend to cut the deficit through this fund but shares of these companies will also have to perform.”

The government targeted raising 300 billion rupees ($5.5 billion) from the sale of state assets in the year ended March 31, and managed to meet only 80 percent of that goal, as it sought to cap the budget shortfall at 5.2 percent of gross domestic product.

Chidambaram aims to narrow the gap to 3 percent of GDP by the year ending March 2017.

The government plans to raise 400 billion rupees this fiscal year selling stakes in National Aluminium Co., Rashtriya Ispat Nigam Ltd., Indian Oil Corp., Power Grid Corp. of India, Bharat Heavy Electricals Ltd. and Coal India.

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