Govt plans to raise Rs 5,000 cr from stake sale in ITC, L&T, Axis Bank | business | Hindustan Times
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Govt plans to raise Rs 5,000 cr from stake sale in ITC, L&T, Axis Bank

business Updated: Oct 08, 2014 23:52 IST
HT Correspondent
HT Correspondent
Hindustan Times

The government is hoping to raise more than Rs 5,000 crore this year through a specially launched exchange traded fund (ETF) to sell stakes in companies including shares in ITC, Larsen and Toubro (L&T) and Axis Bank among others.

An ETF is a security that tracks an index like an index fund but trades like a stock exchange. Constituent stocks are listed and actively trade and may have representation from various sector to provide the ETF unit holders adequate diversification.

The government will shortly initiate the process of stipulating the broad contours of the ETF, sources said.

ETFs were introduced in India in 2001. Gold ETFs dominate the ETF market in the country.

The government holds 11.27% in ITC, 8.18% in L&T and 11.66% in Axis Bank through SUUTI, an offshoot of UTI.

Last month, the government had approved share-sale plans in three major state-owned companies — Coal India Ltd, NHPC and ONGC — that can potentially earn the exchequer Rs 44,000 crore.

Finance minister Arun Jaitley, in budget for 2014-15, had set a target of Rs 58, 425 crore to be raised through the sale of shares in state-run companies, including minority stakes in private companies such as ITC and Axis Bank.

Revenues from selling shares in state-owned and private companies is critical to the government’s plans to keep the fiscal deficit — shorthand for the amount of money the government borrows to fund its expenses — at 4.1% of GDP in 2014-15.