India approves privatisation of four state firms

India's cabinet approved the partial privatisation of four state firms but postponed an expected decision on whether to sell stakes in blue chip oil companies.

The United News of India quoted Minister for Divestment Arun Jaitley as saying that the cabinet discussed the "modalities" of privatisation of state firms.

The news agency said the cabinet approved a reduction in government equity to below 50 per cent in Hindustan Zinc Limited, Sponge Iron Limited, Hindustan Insecticide Limited and Mineral Exploration Corp Limited.

"We will give up management control in all four companies. The government stake will come down from above 90 per cent to less than 50 per cent. We might keep a minority 26 per cent stake," Jaitley said.

The cabinet had been expected to take a decision on whether the country's oil sector, which is controlled by state-run firms, should be labelled strategic and ineligible for privatisation.

"We will meet again on September 26 after Prime Minister Atal Bihari Vajpayee returns from his visit to the United States. We will then take up more cases for privatisation," said Shourie.

Oil sector firms such as the Indian Oil Corp are among the most profitable state firms in the country.

India has set a target of raising Rs 100 billion ($2.3 billion) from privatisation of state firms in the fiscal year ending March 2001.

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