The government has significantly accelerated its share sale strategy, with eight companies now identified for stake sales in the coming months as Prime Minister Narendra Modi's administration seeks to bolster public finances strained by high oil prices and the West Asia crisis. According to Upstox News Desk, officials are holding weekly meetings with investment bankers to gauge investor demand, determine pricing and finalize timelines for future offerings. The government has already raised ₹24,928 crore in the first quarter alone, representing 31% of its full-year budgeted target and marking the fastest pace of disinvestment ever in the first quarter. The West Asia crisis has pushed up energy and fertiliser import prices, with the impact expected to widen the fiscal deficit beyond budgeted estimates. As reported by Bloomberg, officials are also considering inviting fresh bids and lowering the reserve price for the sale of a majority stake in IDBI Bank Ltd. after an earlier attempt was stalled by weak buyer interest.
Life Insurance Corporation of India (LIC) emerges as the most significant OFS candidate, with the government planning to sell up to 2% stake potentially raising ₹10,000 crore ($1.05 billion). As reported by Bloomberg, LIC's total premium income stood at ₹5.4 trillion at the end of FY26, while the government currently holds a 96.5% stake in the company. The current stake sale is part of a major plan to gradually reduce the government's holding to the required minimum public shareholding of 75%. While the current dilution may be small, additional LIC stake sales over coming years are expected to achieve the regulatory threshold.
Hindustan Zinc Ltd. has been identified as another major candidate, with the government expecting to raise ₹5,000 crore from the mining giant. Several major banks remain strong candidates for future OFS rounds due to excessive government holdings. Indian Overseas Bank (IOB) operates 3,494 branches with ₹6.8 trillion in total assets, yet the government holds 92.4% stake, significantly above SEBI's mandated 75% limit. Similarly, Central Bank of India maintains ₹8.12 trillion business with 81.2% government ownership as of May 2026. UCO Bank operates 3,412 branches with ₹5.9 trillion global business assets, where the government still owns 90.9%.
Defence and infrastructure PSUs also feature prominently in the government's divestment strategy. Mazagon Dock Shipbuilders operates as one of India's leading defence shipyards with ₹81.2% government ownership above SEBI's 75% limit. The government recently concluded an OFS in General Insurance Corp. of India (GIC), offering 5% stake at ₹352 per share, raising around ₹30 billion. Hindustan Aeronautics (HAL) maintains a 71.6% stake, while IRCON International holds 65.2% ownership, both remaining potential candidates for future stake monetisation.
The divestments are part of the government's all-round efforts to garner revenues, especially from the non-tax side, amid stress of increased expenditure on subsidy due to a higher import bill. As per Upstox News Desk, the government has set a ₹80,000 crore target for FY27 from disinvestment and asset monetisation, with the government already firmed up a pipeline of public sector companies to be divested in the current fiscal with hopes of exceeding the budgeted target. The fiscal deficit stood at over ₹1.62 lakh crore or 9.6% of FY27 Budget target in the first two months of the fiscal, with the government having set a 4.3% fiscal deficit target for FY27. The government has discontinued fixing separate disinvestment targets since the Revised Estimate of FY2023-24, maintaining ₹30,000 crore, ₹33,000 crore, ₹33,837 crore and ₹80,000 crore under Miscellaneous Capital Receipts for RE 2023-24, RE 2024-25, RE 2025-26 and BE 2026-27 respectively.
