India is accelerating a plan to sell stakes in major state-held companies as it looks to raise billions of U.S. dollars to plug the gap left by the oil shock from the Strait of Hormuz closure.
The Indian government has identified eight state-owned companies in which it would seek stake sales in the coming months, including in major insurers and banks, sources with knowledge of the plan told Bloomberg on Thursday.
The proceeds from the stake sales could be worth $1 billion each for some of the biggest firms, such as the biggest life insurer, the Life Insurance Corporation of India (LIC), according to Bloomberg.
India is looking to shore up its finances after the Iran war caused a major supply shock and an equally large price shock to India’s energy import bill, which soared in March, April, and May.
India, which relies on imports for nearly 90% of its oil consumption, and on imports of LPG, its main cooking fuel, has seen a few testing months since February 28, as it had to pay up for supply that wasn’t dependent on the Strait of Hormuz, at prices above $100 per barrel.
As a result, the oil price spike has weighed on the Indian currency, economic growth, budget deficit, and the current account.
In April and May, economists and India’s own central bank downgraded the expected economic growth for the fiscal year through March 2027, due to the energy price shock.
More recently, a senior official at the Reserve Bank of India said that the economy could return to the trajectory to grow by 7% and even more in the 2026/2027 fiscal year if oil prices remain close to the current $70 per barrel.
Oil prices at about $70 a barrel and a pick-up in tanker traffic at the Strait of Hormuz would reduce upward pressure on India’s inflation and improve the outlook for its economy, Nagesh Kumar, an external member of the Reserve Bank of India’s monetary policy committee, told Bloomberg in an interview published last week.
By Tsvetana Paraskova for Oilprice.com
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