The Indian government plans to sell an 8.38% stake in state-owned iron ore mining group National Mineral Development Corporation (NMDC).

It is seeking to raise $3bn through a follow-on public offer. The government held a 98.38% stake in NMDC but, as part of a plan to cut ownership of profitable state-run companies, it needs to reduce its holding to 90%.

The sale would be the largest divestment of a government holding since 1991, when India began a policy of financial liberalisation.

India aims to sell shares in about 60 state-owned companies as the government tries to raise funds for reforms and to cover a widening fiscal deficit. India plans to spend $8.95bn in the year ending 31 March to improve infrastructure and boost economic growth.