The Economic Survey has proposed redefining “government company” for listed central public sector enterprises (CPSEs) to 26% ownership from 51% now to preserve control while enabling monetisation.
If implemented, this would put disinvestment in CPSEs, which has remained at a low ebb in recent years, on the fast-track, helping boost non-debt capital receipts for the government, besides potentially enhancing efficiency of operations and use of capital. Creating a buffer for downside risks to tax revenues is another potential gain.
Alternatively, the survey suggested phased disinvestment below 51% to proceed toward privatisation without legal changes.
Market Cap Trends
As of January 29, combined market cap of 90 listed CPSEs (including 12 PSBs) stood at Rs 66.6 lakh crore, accounting for 14.5% of the total market cap on the BSE.
With government shareholding in nearly 30% of listed CPSEs already below 60%, the scope for further stake sales through the Offer for Sale (OFS) route is narrowing under the current Companies Act definition of a “government company,” which requires at least 51% ownership.
“Since effective control requires only about a 26% stake, the Government could consider amending the definition of “Government Company” under the Companies Act, limited to listed entities, to allow them to remain as government companies with a minimum of 26% ownership, thereby retaining special resolution rights, while enabling the government to monetise its stake.
Part of the proceeds from stake sales could be channelled into strategic investments in emerging technology and innovation-led firms through professionally managed vehicles such as the National Investment and Infrastructure Fund (NIIF), recycling public capital into future-oriented growth sectors while improving overall asset efficiency.
Receipts from asset and equity monetisation remain a vital pillar of the Government’s non-debt capital receipts, supporting fiscal consolidation while creating space for productive public investment. So far in FY26, the government has mobilised Rs 8,768 crore in disinvestments anchored in market-based transactions.
Infrastructure Investment Trust (InvIT)-based monetisation generated Rs 18,837 crore, highlighting the growing role of structured financial vehicles in asset recycling. The ongoing process for the strategic sale of IDBI Bank could conclude in the next financial year.
Professionalizing Governance Frameworks
Disinvestments would enable CPSEs to evolve into professionally managed entities with dispersed ownership and transparent governance frameworks, the finance ministry economists said.
The last major strategic disinvestment was Air India in FY22. However, two other strategic disinvestments were carried out by the government for CPSEs’ subsidiaries (Ferro Scrap Nigam and NINL) thereafter.
Disinvestment revenues have been very modest in recent years: Rs 10,163 crore in FY25, Rs 16,507 crore in FY24 and Rs 35,293 crore in FY23.
Strategic disinvestment has progressed in a calibrated and institutionally grounded manner. Since 2016, in-principle approval has been granted for the strategic disinvestment of 36 CPSEs, with 13 transactions completed and the remainder at various stages of implementation.
During FY26, approvals were also accorded for stake dilution or exit from select joint ventures, including NTPC’s divestment from Utility Powertech Limited. These initiatives have been supported by governance reforms empowering CPSE Boards to undertake closure, merger, or disinvestment of subsidiaries, thereby improving operational flexibility and capital efficiency.