The Indian government yesterday raised $1.4 billion through share sales, in a push to shore up state finances before it heads into a tough parliamentary election next month.

As a result, New Delhi managed to exceed its sharply-lowered budget target to raise as much as $3.1 billion via stake sales in some private as well as state companies in the fiscal year to March 31, after years of falling short.

Some analysts hope the new government, taking office in May, will speed divestments to bolster revenue generation and trim the budget deficit, as part of efforts to revive slowing economic growth.

Finance Minister P Chidambaram had pencilled nearly $9 billion in divestment revenues into his budget for this fiscal year, but slashed that figure last month to $3.1 billion.

He also set an ambitious target of raising $8.5 billion from further share sales in the next fiscal year, but this estimate could be revised by a possible successor after the election.

"With the next government in place, one would only expect better fortunes from stake sales," National Institute of Public Finance and Policy economist N R Bhanumurthy said.

Stake divestment was a key plank for the ruling Congress party, forecast to face its worst defeat in the upcoming parliamentary election, its support undermined by an economy growing at its slowest pace in a decade.

Against the revised target of raising $2.6 billion by selling stakes in state companies and another $490 million from selling part of its holdings in some private companies, the government is set to end the year with a combined $3.5 billion.

The government yesterday raised about $900 million by selling nine per cent of Axis Bank Limited, India's No 3 private sector bank by assets, to institutional investors.

The sale will pare the government's ownership in Axis Bank, held via a trust fund called Specified Undertaking of the Unit Trust of India, to 11.7 per cent.

Separately, about $490m was raised by selling partial stakes in 10 state-owned companies via an exchange traded fund operated by Goldman Sachs' asset management unit in India.-Reuters