India is planning to raise $2.7 billion by selling the stake of in the world’s largest coal producer and a bank to raise funds for the stimulus program aimed at boosting the virus affected economy.
The proposal involves a share sale depending on the market sentiment, said the officials, who asked not to be identified, as the discussions are private. In the case of Coal India NSE 0.73 %, if valuations are not attractive, the company will buy back shares from the government, they said. Two calls made to the finance ministry spokesman remained unanswered.
Despite the economic cost, the spread of infection continues unabated with India surpassing Russia to become the third worst-hit country with more than 740,000 Covid-19 cases, putting further pressure on finances.
Life Insurance Corp. of India bought 51% of IDBI Bank last year, leaving the government with about 47%. The government holds more than 66% in Coal India. It had previously sold a 10% stake in January 2015, mopping up 225.5 billion rupees.
Economists in a Bloomberg survey expect the nation’s fiscal deficit this year to hit 7% of GDP — a level last seen in 1994. The International Monetary Fund sees the country’s public debt rising to 85.7% of GDP next year from around 70% now.
