Indian state-run explorer Oil and Natural Gas Corp on Friday deferred a share sale expected to raise as much as $2.5 billion, further slowing the government's divestment program and raising concerns of the impact on India's fiscal deficit. "I think it is now a foregone conclusion that the government won't meet its divestment target this year," said Mohit Mirchandani, head of investments at Religare Portfolio Management Services.
"The effect on the broader equity market will be in terms of worries about the government falling short of finances, and the fiscal deficit going up," he added. The ONGC offer was part of a broader federal plan to raise about $9 billion from share sales this fiscal year, an effort aimed at plugging India's fiscal gap and generating funds for schemes for the poor.
But the Indian government has raised only about $250 million through the $1 billion public offer in Power Finance Corp in May, the only divestment so far this fiscal year. It has not provided new dates for the ONGC offer. Other large planned divestments, including a share sale in Indian Oil Corp of up to $4 billion and a $1.8 billion offer in Steel Authority of India Ltd have also been deferred.
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