Civil Aviation Minister Rajiv Pratap Rudy told reporters that the federal cabinet had given its consent to spinning off airports at New Delhi and Mumbai into companies and selling 74 per cent stakes in them to a private firm.

The Indian government has embarked on an ambitious privatisation drive to reform state-run enterprises and hopes to raise 132 billion rupees ($2.89 billion) through sale of equity in these companies in the year to March 2004.

But analysts say the drive may lose steam ahead of key state elections later this year and national elections in 2004.

The government has already bowed to political pressure, reversing plans to sell a 61 per cent stake in National Aluminium Company (NALCO), the country's second largest aluminium maker.

Rudy said the state-owned Airports Authority of India (AAI), the umbrella body which operates the country's 130 airports, will hold 26 per cent stakes in the privatised airports while retaining air traffic control and airports security services.

"Two separate companies will be formed with initial equal equity participation from the AAI", said Rudy.

He said there will be separate invitations for prospective bidders globally to submit expression of interest for the two projects.

The two international airports, even though shabby by world standards, are the country's busiest and most profitable with traffic growing at 5.0 to 5.5 per cent a year.