To meet the minimum public shareholding (MPS) norm of 25% in listed public sector enterprises at the earliest, the government will accelerate stake sales in over a dozen PSUs and list major unlisted state-run firms, sources told FE.
Apart from meeting regulatory norms, the stake dilution will also generate substantial non-tax revenues — a key focus area for the government amid slowing tax collections.
“Clear instructions have been issued for listing of major unlisted firms and meeting the 25% MPS norm,” an official said.
Currently, about 19 public sector enterprises and financial institutions have a public float below the 25% threshold. If five of these — LIC (public holding 3.5%), SJVN (18.15%), General Insurance Corporation (17.6%), IRFC (13.64%), and Mazagon Dock (18.78%) — are to meet the 25% requirement, they could fetch the government as much as ₹1.5 lakh crore at current market prices.
What did financial services secretary M Nagaraju say?
Recently, financial services secretary M Nagaraju said the government may sell a small stake in the Life Insurance Corporation (LIC) depending on market conditions. In May 2024, Sebi gave the insurer three more years, till May 16, 2027, to achieve 10% minimum public shareholding.
Sebi mandates that listed firms reach a minimum 10% public holding within two years of listing. LIC’s public float remains 3.5% after the government raised ₹20,516 crore from its May 2022 IPO.
Apart from offers for sale (OFS) in listed firms, the Centre is pushing to list major state-run entities such as the Export Credit Guarantee Corporation (ECGC) and India Infrastructure Finance Company (IIFCL).
Sitharaman on proceeds from strategic disinvestment
Finance minister Nirmala Sitharaman has said that proceeds from strategic disinvestment and public offerings in central public sector enterprises (CPSEs) will play a central role in maintaining the glide path for deficit and debt reduction, especially as the fiscal impact of the Eighth Pay Commission award begins to surface in FY28.
“Disinvestment should set the tone for revenue generation. Asset monetisation will also continue, and we are considering increasing public float in CPSEs,” Sitharaman said recently.
The Economic Survey for 2025–26, presented on February 1, proposed redefining a “government company” for listed CPSEs to 26% ownership from 51% now — to preserve control while enabling monetisation.
If implemented, this would fast-track disinvestment in CPSEs, which has remained sluggish in recent years, boosting non-debt capital receipts and potentially enhancing operational efficiency and capital use. Alternatively, the Survey suggested phased disinvestment below 51% to move toward privatisation without legislative changes.
As of January 29, the combined market capitalisation of 90 listed CPSEs (including 12 PSBs) stood at ₹66.6 lakh crore, accounting for 14.5% of the total BSE market capitalisation.
With government holdings in nearly 30% of listed CPSEs already below 60%, the scope for further stake sales through the OFS route is narrowing under the current Companies Act definition of a “government company,” which requires at least 51% ownership.