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The government can raise up to Rs 11.5 lakh crore through stake sales in public sector enterprises while maintaining a 51% majority stake.
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CPSEs, PSBs, and insurance firms have a total divestment potential of Rs 11.5 lakh crore at current market prices.
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The government may not opt to divest all of its potential and the decision to divest will depend on various factors.
The Indian government has the potential to raise a significant amount of funds through stake sales in public sector enterprises. According to a report by CareEdge, the government can raise up to Rs 11.5 lakh crore while maintaining a 51% majority stake in these companies. This amount is more than twice the total divestment of Rs 5.2 lakh crore conducted since 2014.
The report highlights that CPSEs, PSBs, and insurance firms have a total divestment potential of Rs 11.5 lakh crore at current market prices. Indian Railway Finance Corporation Ltd, Hindustan Aeronautics Ltd, Coal India Ltd, and Oil and Natural Gas Corporation are the top firms in terms of divestment potential. However, the government may not opt to divest all of its potential and the decision to divest will depend on various factors such as the industry’s strategic nature, the companies’ profitability, financial market conditions, and welfare and social considerations.
The report also notes that the government has missed its disinvestment target for five consecutive years and that achieving the target hinges on the government’s ability to proceed with big-ticket divestments. The conclusion of the election season and the current market conditions provide a perfect opportunity to advance significant divestment initiatives. However, past issues such as procedural delays, litigations, and pricing issues may continue to slow divestment despite favourable market conditions.
