Many state-run Indian firms are eager to list their shares on the stock market and it was good for them to do so, the prime minister said on Thursday, a sign that more stake sales were likely in coming months. Prime Minister Manmohan Singh also said the government would grant more autonomy to state-run firms and allow them to raise capital so that they could expand operations faster.
After Singh's Congress Party-led coalition government was re-elected in May, it looked to revive stake sales and has had successful issues of NHPC and Oil India in recent months. "More and more public sector enterprises (PSEs) are entering the capital markets and are striving to become active global players," Singh told a conference. "A number of PSEs have since got their shares listed on the stock markets and many more are eager to do so."
He said a listing would unlock the true value of a company, improve corporate governance and help a firm raise funds for expansion. In its July budget, the government said it planned to raise 11.2 billion rupees from initial public offers of unlisted firms including Railways subsidiary RITES, Cochin Shipyard, Telecommunications Consultants India and Manganese Ore India.
In the past few months, ministers and officials have named firms such as NMDC, NTPC, BHEL, Rural Electrification Corp, Shipping Corp of India and Coal India as candidates for stake sales. On Tuesday, the finance ministry's chief economic adviser told Reuters stake sales would pick up in the months ahead and the government was considering changing rules for using stake sale proceeds to bridge the deficit.
In July, a government report had forecast that up to 250 billion rupees per annum could be raised from stake sales. Singh also said the economy has weathered the global slowdown better than others. Government officials expect the economy to expand by at least 6.3 percent in 2009/10, compared with 6.7 percent last year and 9 percent or more in between 2005/06 and 2007/08.