NEW DELHI/MUMBAI (Reuters) - India plans to sell stakes worth $5.4 billion in seven state-run companies during the current financial year as Asia’s third-largest economy looks to fund its fiscal deficit amid ramped-up spending on rural areas and infrastructure.

A motorcyclist rides past an advertisement of Steel Authority of India Ltd. (SAIL) at a street in New Delhi, India, August 5, 2016. REUTERS/Adnan Abidi/File Photo

The part sale of government stakes in state-run and private firms is critical to meet the fiscal deficit target of 3.2 percent of gross domestic product in the year to March 2018. India aims to raise 725 billion rupees ($11.26 billion) through stake sales during the year.

The Department of Investment and Public Asset Management has sought bids from merchant bankers and legal advisors to manage the sale of shares in firms including Indian Oil Corp Ltd IOC.NS, NTPC Ltd NTPC.NS and Steel Authority of India Ltd (SAIL) SAIL.NS, according to bidding documents on its website.

The government will sell the stakes through the offer-for-sale route, meaning by auction on stock exchanges.

The sales could fetch the government 345 billion rupees at the last closing price of the stocks, according to Reuters calculations.

The government plans to sell 3 percent of top fuel retailer Indian Oil Corp Ltd IOC.NS and 10 percent each of top utility NTPC, largest steelmaker SAIL and hydropower producer NHPC Ltd NHPC.NS.

It also plans to sell 5 percent of Rural Electrification Corp Ltd RURL.NS, 10 percent of Power Finance Corp Ltd PWFC.NS and 15 percent of miner NLC India Ltd NLCI.NS.

Some of these firms were listed for stake sale in the last fiscal year too but the programme faltered due to adverse market conditions, forcing the government to revise down its fund-raising target to 455 billion rupees.

In 2016/17, the government raised 462.47 billion rupees from asset sales.

($1 = 64.3900 Indian rupees)