Summary The cabinet has cleared the sale of a 9.5-percent stake in power utility NTPC.
India says it is hopeful of meeting its privatisation target even though state-run financial institutions had to bail out its sale of a stake in a state-run copper miner.
The cash-strapped government raised eight billion rupees ($144 million) by selling 5.58 percent of Hindustan Copper through a stock exchange auction, exceeding its goal of unloading at least four percent of the company.
"I am happy the (Hindustan Copper Ltd) issue has been fully subscribed," Finance Minister P. Chidambaram said late Friday after the sale results were announced.
"This is the resumption of the disinvestment process and we will go forward with more privatisations," he said, adding: "I am hopeful we can collect the targeted 300 billion rupees ($5.44 billion)" for this fiscal year to March 2013.
The sale of the stake in Hindustan Copper marked a belated start to the government s privatisation drive for this fiscal year.
The government of Congress Prime Minister Manmohan Singh was forced to jettison a couple of earlier sell-offs due to sluggish market conditions in a sharply slowing economy.
Most of the bids for Hindustan Copper came from state-run institutions -- underscoring continuing weak retail investor appetite -- even though the stake was sold at a deeply discounted price.
The government urgently needs to raise capital from privatisation as it struggles to rein in a ballooning deficit that threatens to exceed a targeted 5.3 percent of gross domestic product.
Cutting the deficit has become even more crucial since ratings agencies Standard & Poor s and Fitch reduced India s sovereign ratings outlook to "negative," jeopardising the country s investment grade status.
Among other privatisations, the government aims to sell 10 percent of iron-ore miner NMDC to raise around 70 billion rupees and a five percent stake in energy explorer Oil India to collect 25 billion rupees.
The cabinet has also cleared the sale of a 9.5-percent stake in power utility NTPC.
The government s renewed privatisation drives comes after it said it would triple to 30 percent the maximum stake India s biggest insurer, state-run Life Insurance Corp, or LIC, can hold in other companies.
The move is seen by analysts as a bid to help the government sell off stakes in state companies.
LIC has helped mop up shares in other government sell-offs -- most recently in the $2.6-billion sale earlier this year of Oil and Natural Gas Corp stock.
Although such deals technically reduce the state s holdings, the government remains the companies major shareholder.
The government sees such sales as a way to raise vital funds.
But critics call the sales a "stock shuffle" in which the government obliges state companies to buy each others shares and deprives them of capital that could be used for other purposes.
