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Oil PSUs: Centre plans cutting stake in IOC to below 51%

By IndianMandarins- 15 Nov 2019


The Centre is planning to cut its stake in the IOC below 51% to become a minority shareholder which currently holds 51.5 per cent in the oil major. To boost economic growth, the Central government has been on a divestment spree and has been considering cutting stake in several companies. IOC is the third oil company in which the government plans to cut it stakes.

Besides IOC, ONGC is looking to sell its stake in the recently-acquired refiner HPCL to a strategic investor, possibly an overseas oil company, to regain debt-free status of the company existing prior to the expensive buy.

The plan for HPCL follows the government's go ahead to invite a strategic investor for BPCL where the Centre owns 53 per cent stake. The divestment is important from the fiscal math perspective.

India's fiscal deficit at the halfway mark in 2019-20 stood at 92.6% of budgeted estimates, lower than 95.3% in April-September, 2018-19, helped by transfers from the RBI. With muted tax revenues, the government will have to undertake spending cuts and divest to achieve FY20 fiscal target of 3.3 per cent of GDP. 

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