India has approved its largest privatisations to date with the sale of stakes in two state-owned oil companies.

Cabinet approved the sell-off of 34% of Hindustan Petroleum to a strategic investor and the floatation of 35.2% of Bharat Petroleum on Indian and international stock markets, Privatisation Minister Arun Shourie said.

The sales, which are expected to raise more than 80bn rupees (�856m; $1.4bn), will take place "as soon as possible", Mr Shourie said on Sunday.

They mark a renewed push to dispose of state assets after political infighting in the government caused the programme to stall.

The government, which planned to raise 120bn rupees by the end of the financial year in March, has only sold 50bn rupees in assets.

Plans to sell a controlling stake in state-run National Aluminium Company (Nalco), the country's second-largest aluminium producer, before the end of the financial year in March have reportedly been shelved.

Strategic control

The decision to sell the oil companies was postponed in September due to objections from Petroleum Minister Ram Naik and Defence Minister George Fernandes who said they were strategic assets.

The government, which holds a 51% in Hindustan Petroleum and 66% of Bharat Petroleum, will give up direct control of the companies.

Royal Dutch Shell and Reliance Industries, India's largest company, are considered as leading bidders for Hindustan Petroleum.

Five percent of each company will be offered to employees, Mr Shourie said.