The government may fall woefully short of meeting its target of raising R40,000 crore by way of share sales in public sector companies. For the first six months of financial year 2012, it has mopped up just R4,578 crore through its follow-on public offering (FPO) in Power Finance Corporation. That?s just about 11.4% of the projected target.

The government was banking heavily on ONGC?s FPO. It had planned to offload 5%, or 427.77 million shares, through the share sale and mop up around R12,000 crore. Last month, the FPO was called off at the eleventh hour as the government developed cold feet because of renewed turmoil in global equities. Had the proposed FPO gone through, it would have helped the government mop up around 40% of its targeted amount.

The FPO was earlier scheduled to take place before the completion of financial year 2011 but was deferred to April 5 as ONGC failed to meet market regulator Sebi?s listing norms pertaining to independent directors. It missed this deadline and was rescheduled for July 5, but was deferred due to adverse market conditions.

Other possible share sales lined up this year include Bhel, SAIL, National Buildings Construction Corporation and Rashtriya Ispat Nigam. Bhel and SAIL together could help mop up about R8,000 crore, while Ispat could help raise R1,000 crore.

It?s not just the government which is shying away from public offerings. While several SMEs and companies with a turnover of about R100 crore have hit the market, large firms from the private sector have put their fund-raising plans on the back burner. The only noteworthy issue from a large firm was that of L&T Finance Holdings, which raised R1,245 crore through its share sale.

Indian companies raised R10,497 crore in the first six months of fiscal 2012 by way of initial public offerings (IPOs), FPOs and qualified institutional placements (QIPs) compared with R28,592 crore raised in the same period last year, according to data compiled by Prime Database.

It?s been a particularly difficult year for Indian equities. The benchmark BSE Sensex has declined by nearly 21% in the year to date. ?Pricing an issue when the markets are this volatile is difficult,? said Prashant Shetty, managing director, IDFC SSKI. ?It is quite impossible for any merchant banker to sell a large issue when the markets are so volatile. So, the government may have to think out of the box to sell the issue to investors,? pointed out another merchant banker.