Given India’s ambitious growth targets, vast infrastructure needs, and the limits of debt-financed expansion, the forthcoming Union Budget should lean more decisively on disinvestment and asset monetisation. The case for doing so has been reinforced by recent experience. The strategic disinvestment policy announced by the government in 2021-22 was a clear shift as it distinguished between strategic and non-strategic sectors, and promised minimal state presence in the former and exit from the latter. Four years on, progress has all but stalled with the disinvestment programme delivering a weak showing year after year.
This underperformance has prompted policy think tanks to push for a reset, including proposals to accelerate privatisation and deploy the proceeds more strategically. Among the ideas doing the rounds is the creation of a dedicated “wealth fund” to channel disinvestment receipts into new infrastructure and productive assets, rather than treating them as routine budgetary fillers.
Unlocking PSUs
Disinvestment and asset monetisation are not merely tools to plug revenue gaps. Properly deployed, they signal a shift in how the state manages its balance sheet. Instead of locking scarce capital into underperforming or non-core public enterprises, the government can unlock value and redeploy resources towards delivering public goods more efficiently. When executed with clarity and discipline, these measures can fund infrastructure creation without adding to the debt burden, strengthening fiscal sustainability at a time of global uncertainty.
India’s record on privatisation, however, has been uneven. Beyond marquee successes such as the strategic sale of Air India, broader efforts have struggled to gather momentum. Plans to monetise government-owned hotels such as Ashok or divest stakes in several public sector undertakings (PSUs) have repeatedly stalled, reflecting hesitation, execution challenges, and political caution. The result has been a stop-start approach that has diluted credibility and investor confidence. A more ambitious and structured push in the Budget could alter this trajectory. Such signalling would reassure investors that privatisation is not episodic or opportunistic, but part of a coherent long-term strategy.
Asset monetisation under the National Monetisation Pipeline offers a complementary route.
NMP 2.0 Vision
By leasing operational infrastructure assets—highways, power transmission lines, ports, and rail assets—to private investors, the government can raise capital while retaining ownership. This approach not only generates upfront resources but also brings private-sector efficiency and managerial discipline to assets that are often underutilised. Crucially, it expands the investable pool for building new infrastructure, creating a virtuous cycle of capital recycling.
A sharper focus on disinvestment and monetisation delivers multiple dividends. Proceeds from asset sales and leases are non-debt capital receipts, offering fiscal headroom without burdening future generations. Divesting non-core PSUs frees up capital for priority areas such as energy transition, digital infrastructure, and climate resilience. A credible privatisation pipeline can also boost investor sentiment, attract long-term foreign capital, and deepen domestic financial markets.
Concerns around job losses or loss of national control cannot be dismissed lightly. But they can be addressed through transparent valuation, robust regulation, and well-designed social safeguards for affected workers. Disinvestment need not be an ideological sell-off; it can be a pragmatic instrument for more efficient and inclusive growth. The upcoming Budget offers a chance to reframe India’s fiscal playbook. By prioritising disinvestment and asset monetisation, the government can unlock dormant value, fund public investment without stretching the balance sheet, and lay firmer foundations for sustained growth. In an era of constrained public finances, capital recycling is no longer optional—it is essential.