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BJP's success in two state elections gave Modi room to cut through a thicket of regulations and state controls.
India moved a step closer to selling a stake in a state-run oil company on Monday, keeping up Prime Minister Narendra Modi's momentum on economic reform after bringing the prices of diesel and natural gas more in line with the market's.
The administration's top privatisation official met bankers on Monday in the financial capital, Mumbai, to discuss the sale of a 5 per cent stake in Oil and Natural Gas Corp (ONGC), a top finance ministry official said.
The ruling party's success in two state elections last week capped several days of action on the economic front and has given Modi more room to cut through a thicket of regulations and state controls he says holds back Asia's third-largest economy.
Modi was elected in May on promises of creating jobs and bringing the bounce back to the Indian economy, but investors and economists were disappointed by his first budget and a lack of early structural economic reforms.
In the last week, he has gone some way to quell those concerns, putting in a reform-minded team at the finance ministry that includes prominent economist Arvind Subramanian to help formulate the Budget and policy.
He also begun an overhaul of creaky labour rules, cutting the power of labour inspectors and slashing the red tape for small companies that makes India one of the toughest places in the world to do business.
Indian shares, bonds and rupee currency all performed strongly on Monday in response to the new economic policies and the victories by Modi's Bharatiya Janata Party (BJP) in Maharashtra and Haryana.
Modi's cabinet met on Monday evening and officials said it might discuss share sales in some smaller state-run companies and possible reforms to the coal industry, although the agenda was not made public.
One restraint on Modi's government is his small bench of ministers, many holding multiple portfolios. Jaitley, for example, doubles as defence minister. Information and Broadcasting Minister Prakash Javadekar, who also acts as environment minister, last week suggested that an expansion of the cabinet was imminent.
Balancing the books
The finance ministry hopes to raise up to $3 billion from the sale, almost a quarter of its target for asset sales for this financial year.
"It is the right time for disinvestment in ONGC," a top finance ministry official with direct knowledge of the matter told reporters in a briefing.
"We are following it very fast," said the official, when asked whether the share sale, first approved in September, could happen next month.
Citigroup and HSBC are among five banks chosen to manage the planned sale of a stake in ONGC, sources told Reuters in August.
The ONGC share sale was likely to be held in the first half of November, two people directly involved with the transaction said on Monday. The pre-sale marketing roadshows for the offering are expected to be completed by the first week of the month, they said.
The finance ministry official, who declined to be identified because of the sensitivity of the topic, also told reporters the government wanted to pass a bill in parliament's next session to free up foreign investment in the insurance industry.
The measure will need backing from across political parties, because the government does not have a majority in the upper house.
Saturday's decision to free diesel pricing of government intervention makes ONGC more attractive to investors. It will reduce the hefty discount on crude oil sales that the country's top oil producer must give to fuel retailers.
ONGC, the second-largest listed firm in India by market value, also stands to benefit from a decision on Saturday to raise the price for natural gas by a third to $5.61 per mmBtu.
Shares in ONGC gained 5.6 per cent on Monday. The government has a stake of 68.94 per cent in the company, which has shares of in oil and gas fields across the globe.
In his maiden budget in July, Jaitley set a target of Rs 584.25 billion to be raised by the sale of shares in state-run companies and minority stakes in private companies. Another major planned sale is of a 10 per cent stake in giant Coal India.
The income is key to meeting a challenging goal of a fiscal deficit of 4.1 per cent of gross domestic product for the year ending March 31. Tax revenue has been less than budgeted this year, and government finances have been stung by a large bill for tax rebates.
