The government has mobilised ₹20,274 crore via PSU divestment in FY27, marking the highest level since FY23 when it raised ₹35,294 crore. According to data compiled by Business Standard, this represents a significant acceleration in stake sale initiatives for public sector undertakings. The centre has launched offer for sale (OFS) for seven PSU companies so far this year, including Central Bank of India, Coal India, NHPC, NLC India, General Insurance Corporation, IRFC and Cochin Shipyard.
The government has raised about 31 per cent of its full-year budgeted target of ₹80,000 crore in the first quarter itself, as reported by Business Standard. This demonstrates strong momentum in the divestment programme, with the government making all-round efforts to garner revenues, especially from the non-tax side. The divestment receipts show a clear upward trajectory, with FY24 recording ₹16,507 crore, FY25 at ₹10,163 crore, and FY26 at ₹16,886 crore.
The government is facing multiple challenges that are driving the divestment push, according to Business Standard reports. These include possibility of lower tax collections, stress of increased expenditure on subsidy due to a higher energy import bill, and impact of El Niño on the monsoon. India, the second largest fertiliser user globally, is facing supply disruptions as the Middle East crisis has disrupted shipping routes, raising the cost of supplying fertilisers. The Ministry of Chemicals and Fertilisers has approached the Ministry of Finance for a larger fertiliser subsidy allocation this year from the budgeted ₹1.71 lakh crore to around ₹3.42 lakh crore.
Market experts provide mixed views on the divestment strategy. Dhananjay Sinha, CEO & Co-Head – Institutional Equities at Systematix Group, told Business Standard that the government is facing a gridlock on the revenue side, with its ability to support the economy actually declining. However, G Chokkalingam, Founder at Equionomics Research, believes pushing PSU stake sales in the first half of FY might be "a smart strategy" based on historical trends. He expects the market to be robust in the short term, particularly the small- and mid-cap segments to which several PSU stocks belong.
The government maintains a strong pipeline of PSU companies for divestment. According to Business Standard, the strategic sale in IDBI Bank is on the table, with a Bloomberg report signalling the government is close to accepting an offer from Fairfax Financial Holdings. Another major disinvestment could be Life Insurance Corporation (LIC), where the government currently holds 96.5 per cent and must lower it to 90 per cent by May next year. Chokkalingam expects divestment proceeds could be higher than recent years, with the RBI's liberal dividend policy also providing additional support.
