ministry. It was decided at the same meeting that the ministry of mines will move Cabinet note regarding the sale of residual stake in Balco. The government owns 49% in Balco.
The government initially planned to sell its residual stake in HZL and Balco to Vedanta, which is the majority stakeholder in both companies and had call options available for both. There were, however, legal hurdles as the mines ministry had said that such a move would require Parliamentary approval. That is why the views of the law ministry and the attorney-general were taken.
The finance ministry now favours selling the residual stake in the open market. It is now up to the Cabinet Committee on Economic Affairs (CCEA) to take a final call on the stake sales through an auction method.
There has been stiff opposition from all the companies and ministries concerned, and progress, so far, has been very slow. The government has so far managed to garner just Rs 3,000 crore from stake sales in seven PSUs, including Power Grid Corp, Hindustan Copper, National Fertilisers and MMTC.
Finance minister P Chidambaram has been pressing public sector companies to pitch in with special dividends to tide over a Rs 20,000-crore shortfall expected from disinvestment. With a shortfall in tax revenue also expected, Chidambaram is pulling out all stops to prevent a fiscal blow-out and to keep his promise of containing the fiscal deficit at 4.8% of GDP. The Centre is also hoping to raise Rs 3,000 crore through an exchange-traded fund it will launch next month.