The government will raise money by selling shares of CIL and IDBI Bank

The Government of India is selling Rs 20,000 crore stake in Coal India Limited and IDBI Bank to support the struggling economy.

New Delhi (Natural Energy News): The Center is planning to raise up to Rs 20,000 crore by selling its stakes in the world's largest coal producer Coal India Limited (CIL) and IDBI Bank to boost the virus-free economy.

Prior to the COVID-19 pandemic, the government planned to achieve Rs 90,000 crore from LIC listing and IDBI Bank's dilution in its total divestment target of Rs 2.10 trillion this financial year. But the epidemic has disrupted the Union Budget 2020 targets.

Therefore, instead of investing in development, the government has decided to spend more on welfare programs and revive the struggling economy amid lockdowns.

Related Article: CIL hikes Rs 10,000 crore per CAPEX for 2020-21

The government holds more than 66 percent of the Coal Corporation of India. The company sold 10 per cent of its shares in January 2015 and raised Rs 22.550 crore. The government holds about 47 percent stake in IDBI Bank as Life Insurance Corporation (LIC) bought a 51 percent stake last year.

According to a Business Standard report, the proposal includes the sale of shares based on market sentiment, if Coal India's valuation is not attractive, the company will buy back shares from the government.

According to a survey by Bloomberg economists, the fiscal deficit will reach 7 percent of GDP this year, the highest level since 1994. The International Monetary Fund estimates that the country's public debt will increase from 70 percent to 85.7 percent next year. Next year G.D.P.

Related Article: The average daily production of Coal India was 44 percent during the 3-day strike, attendance was close to 36 percent.

The potential credit rating downgrade is another risk for India, which will experience its first economic contraction in more than 40 years in FY21. The country's credit score is only a step away from the junk at Fitch Ratings and the Moody's Investors Service, both of which maintain dominance on a negative watch citing fiscal consolidation.