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A logo of Indian Oil is picture outside a fuel station in New Delhi, India August 29, 2016.Reuters file

In a major decision, the central government is likely to give up controlling stakes in most-profitable state-run behemoths. The centre is seriously planning to spur economic development and maintain its fiscal deficit target. Government has identified one of India's best-performing oil companies including Oil & Natural Gas Corp., Indian Oil Corp., NTPC Ltd. and GAIL India Ltd. for shedding its direct control to below 51 per cent, Bloomberg reported.

Department of Investment and Public Asset Management Secretary Atanu Chakraborty said, "Government's indirect holding, through arms such as Life Insurance Corp. of India, will stay above 51 per cent." In her budget speech, Finance Minister Nirmala Sitharaman set an ambitious target of 1.05 trillion ($15 billion) asset sales target for this financial year. Moreover, she also announced a series of measures to increase the revenues which included increasing taxes on the super-rich, extracting higher dividends from the Reserve Bank of India and increasing duties on gold and gasoline. The government has revised its fiscal deficit target to 3.3 per cent of gross domestic product.

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A technician is pictured inside a desalter plant of Oil and Natural Gas Corp (ONGC) on the outskirts of Ahmedabad, India, Reuters file

The idea of giving up controlling stake in government-owned companies below 51 per cent was also tabled during Sitharaman's budget speech. Batting for more private control in public sector undertakings, Deven Choksey, managing director at KR Choksey Shares and Securities Pvt. Ltd. said, "The government has to consider bringing in strategic investors and give them a say in the management that will spur the growth of these companies."

The performance of the state-owned companies has not been on par with the broader benchmark S&P BSE Sensex. The index of these OMCs has jumped 3.5 per cent since the start of the year as against 7.1 per cent gain in BSE's benchmark index. Former finance minister Arun Jaitley mooted the idea of creating an integrated public sector oil behemoth to match the magnanimity of global oil and gas majors. Some of its stakes in listed domestic oil and gas firms were given up. In January 2018, ONGC bought 51.1 per cent of government in Hindustan Petroleum Corp for $5.78 billion. The step greatly helped the government in narrowing its fiscal deficit.