India invited bids from bankers on Wednesday to manage the sale of a 10 percent stake in iron ore miner NMDC, trying to revive a $10 billion asset sale programme and narrow the country's fiscal deficit to a seven-year low.
Barely two months before the end of the financial year, Prime Minister Narendra Modi is racing to raise even a fraction of the target, a centrepiece of his promise to trim the deficit to 4.1 percent of gross domestic product.
To date, he has managed to garner a little more than $300 million from asset sales. The NMDC share sale could fetch $893 million at current market prices, ahead of the government's first full-year budget on Feb. 28.
The state owns an 80 percent stake in the mining company, shares of which were down 1.8 percent at 138.20 rupees by Wednesday's close. The stock had gained 2.1 percent last year, but is down 4.7 percent since the start of this year.
The shares will be sold through an exchange-based bidding platform, the finance ministry said on Wednesday.
Phani Sekhar, a fund manager at Angel Broking, criticised the decision, saying the government was "selling the family silver".
"I am disappointed with the divestment of NMDC," Sekhar said. "It has so much cash that government should have instead taken a special dividend."
The move to sell shares in the company comes on the heels of a plan under consideration to sell a 10 percent stake in state-run refiner Indian Oil.
Government sources had told Reuters that the cabinet was due to discuss that stake sale at a meeting on Wednesday. However, Telecoms Minister Ravi Shankar Prasad told reporters after the meeting that the matter was not discussed.
The IOC stake is valued at $1.3 billion based on current prices. The shares gained 55 percent last year but dropped 2 percent on Wednesday to 330.05 rupees.
The government's fundraising target relied heavily on Coal India and Oil and Natural Gas Corp (ONGC), in which it has been trying to sell stakes of 10 percent and 5 percent respectively.
The two stakes are worth a combined $6.3 billion at current prices, but the sales have been stalled by opposition from labour unions, plunging oil prices and questions over ONGC's share of fuel subsidies.
This has forced Modi's eight-month-old administration to seek different options, including alternative asset sales and deeper spending cuts.
One finance ministry official said the government had identified hydropower producer NHPC and Dredging Corp as potential candidates for share sales.
It has also decided to cut budgeted public spending by up to 20 percent, another ministry official said.
This is the fifth year in a row that New Delhi is likely to miss its asset sales target.
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.
ONGC shares have fallen by about 14 percent since October.
"We have already missed the bus," the first finance ministry official said. "We would be lucky if we could meet even 50 percent of the target."