The government is reportedly looking to ask cash-rich public sector undertakings (PSUs) to buy stakes in other state-run firms to make up for the massive shortfall of more than Rs 50,000 crore in its disinvestment target set for the current fiscal year.
The idea had attracted a lot of criticism when it was first exercised during Atal Bihari Vajpayee's reign.
Besides, the government is contemplating the idea of share buybacks by the cash-rich PSUs in the firms it may be ready to divest its stake, officials close to the developments told The Economic Times.
"These options are available and have not been exercised. We will ask administrative ministries to hold consultations with their companies and come out with a viable plan," said a senior finance ministry official.
The finance ministry official said that administrative ministries may not be interested in the idea as they see the current market conditions as not suitable for disinvestment in the public sector firms.
So far, the government has raised only Rs 12,600 crore by selling its stake in four public sector undertakings (PSUs) as against the target of Rs 69,500 crore for 2015-16.
The Modi government had planned to raise Rs 69,500 crore through disinvestment in the current financial year, of which Rs 41,000 crore was targeted from minority stake sale and Rs 28,500 crore from strategic stake sale.
Poor stock market conditions have forced the government to delay stake sale in PSUs. It has been able to sell stake in just four PSUs -- Indian Oil, Rural Electrification Corporation (REC), Power Finance Corporation (PFC) and Dredging Corp -- raising Rs 12,700 crore.
With market conditions looking grim to continue with divesting stakes in PSUs and the growing pressure to fiscal deficit target, official are looking at "cross-holdings and share buybacks" to compensate the shortfall in disinvestment proceeds.
The idea is cash-rich firms can use their surplus holdings to buy stakes put up for sale by the government, enabling the finance ministry to achieve its targets.