India's decided to go ahead with state-run Life Insurance Corp's (LIC) initial public offering (IPO) in May due to strong market demand and a "solid" anchor investor base, a top finance ministry official said on Wednesday.

India expects to raise up to $2.74 billion from selling a 3.5% stake in LIC's IPO, just a third of its original target, and is set to open on May 2 for anchor investors.

For subscription the issue will open on May 4 and close on May 9.

Tuhin Kanta Pandey, secretary at the department of investment and public asset management, said the size of the LIC IPO is "optimal" in current market conditions. The government had originally planned to sell a 5% stake in the company.

(Reporting by Nupur Anand; writing by Aftab Ahmed; editing by Jason Neely)