India is planning to ask some state-owned companies to repurchase shares to help the government shore up its finances amid the coronavirus pandemic.
Coal India Ltd., NTPC Ltd., NMDC Ltd., MOIL Ltd., KIOCL Ltd, and Engineers India Ltd. are among the eight companies that might be asked to buy back shares this year.
The government, being the largest shareholder in these companies, will benefit from the transactions by tendering the equity it holds in return for cash. The strategy will help Prime Minister Narendra Modi’s administration access part of the more than 400 billion rupees ($5.5 billion) of cash hoard with the companies as of March 31.
Announcement come at a time when government has struggled to meet its target of raising money from tax and sale of state assets. The government has raised less than 3% of its 2.1 trillion-rupee target selling state assets since April 1, while tax revenues have also slowed as the virus ravages the economy.
This is contrary to the earlier stance of GoI. Capital expenditure by state companies is a critical driver of economic growth and needs to be scaled up for this year as well as next, a statement from the Press Information Bureau quoted Finance Minister Nirmala Sitharaman as saying after a meeting with public sector companies on Monday.
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