Govt makes push to boost revenue as deficit deadline nears

New Delhi: The Central government made a push on Wednesday to bolster its strained finances, offering to sell a stake in miner Coal India and more mobile phone airwaves as it aimed to deliver on a promise to trim its fiscal deficit.

Prime Minister Narendra Modi is racing to honour a commitment to narrow the deficit to a seven-year low of 4.1 percent of gross domestic product (GDP) in the year ending in March.

A revenue shortfall has driven up the deficit to 99 percent of the full-year target in the first eight months of the year, casting doubts on that pledge.

Modi’s eight-month-old administration said it would sell a stake of up to 10 percent in Coal India, of which the government currently owns close to 90 percent.

The stake to be sold, worth about $3.9 billion at current market prices, will be unloaded through an auction on Friday, it added.

Separately, the government will sell 2,100 MHz mobile phone airwaves at 37.05 billion rupees per MHz, Telecom Minister Ravi Shankar Prasad told reporters after a cabinet meeting.

The sale is expected to fetch about an extra $3 billion from a telecoms spectrum band auction scheduled for early March.

New Delhi is aiming to raise $13 billion from the auction, a quarter of which is expected to flow into the exchequer by March 31.

Modi’s deficit promise relies heavily on the asset sale programme. He has budgeted to raise $10 billion selling small stakes in state-run firms. But to date he has managed to raise a little more than $300 million.

The Coal India disposal would cover more than a third of the asset sales target.

The government is also banking on the sale of a 5 percent stake in energy explorer Oil and Natural Gas Corp, worth $2.5 billion. The sale is scheduled before the end of the financial year, the oil minister said on Wednesday.

Friday’s sale will include at least 315.8 million shares in Coal India, with an option to sell 315.8 million more, the statement said. A floor price for the auction will be set on Thursday.

Last week the government invited bids from banks to manage a sale of 10 percent stake in miner NMDC. It is also planning to sell 5 percent in Power Finance Corp (PFC), Dredging Corp of India and Bharat Heavy Electricals, among others.