India's disinvestment plans now easy: Kotak

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New Delhi, July 9: : India could sell stakes in holds in firms after its ruling coalition government shakes off its communist supporters and finds new allies in a pro-business party, investment bank Kotak Securities said on Wednesday.

After the Left parties withdrew support to the ruling United Progressive Alliance on Tuesday, the regional Samajwadi Party promised to shore-up the government in parliament.

Analysts expect the regime to continue in power with support from the SP and other smaller groups. The SP has said it would not be "rigid" on economic issues like the left parties were.

"I do not expect that economic reforms would now be pushed at a breathtaking pace, but it does leave government better off in key area of disinvestment," Mridul Saggar, Kotak's chief economist for institutional equities, told Reuters in an e-mail.

With subsidies rising and the fiscal deficit seen at 4 percent of gross domestic product, stake sales could provide the much needed funds for the government, Saggar added.

India is likely to sell its stake in Tata Communications Ltd and trim holdings in power-producer National Thermal Power Corp Ltd by 4.75 percent through a follow-on offer, Saggar and Puneet Jain wrote in a note to clients.

It is also likely to offload 15 percent of Air India in a public offering, they wrote.

Banking laws could be liberalised to give shareholders voting rights equal to their holdings and and foreigners could be allowed in the pension sector, according to the note.

But foreign investment caps in insurance, banking and telecoms were unlikely to be hiked, they wrote. The SP would also block any move to raise state-set and subsidised fuel prices.