The Centre is mulling to raise around Rs 20,000 crore ($2.7 billion) by selling its stake in Coal India Ltd (CIL) and IDBI Bank to finance a stimulus programme focused on boosting the economy.

The plan entails a stake sale that will hinge upon the market sentiment. In case of Coal India, the company will buy back shares from the government if valuations are not attractive, sources told Bloomberg.

The COVID-19 pandemic has thrown Prime Minister Narendra Modi's budget targets out of gear. The mounting number of coronavirus cases across the country has prompted the central government to increase spending on welfare schemes, as well as stimulate the economy impacted severely by coronavirus lockdown.

PM Modi had in February this year envisaged raising around Rs 2.1 lakh crore by selling state assets in an attempt to contain the budget deficit at 3.5 per cent of the GDP (Gross Domestic Product).

However, the economic cost notwithstanding, the virus cases continue to rise unabated in India that has now overtaken Russia to become the third worst-affected country in the world with nearly 8 lakh COVID-19 cases. This is going to further strain the already depleting finances of the government.

Furthermore, the unprecedented suspension of international travel and lower oil prices have overshadowed Centre's plans to sell national carrier Air India and state-run refiner Bharat Petroleum.

India's asset sale target for the year ending March 31 was more than double the previous year's goal. State-owned LIC (Life Insurance Corporation) had picked up a 51 per cent controlling stake in IDBI last year, leaving the government with around 47% share in the bank.

The Centre holds over 66% in CIL. It had earlier sold a 10 per cent stake in January 2015, mopping up Rs 22,550 crore.