Government achieves 23% of FY27 disinvestment target amid fiscal deficit concerns

Livemint - Economy · 5 Jun 2026 · 2 min read
Prelims · Economy Mains · GS3 Economy High relevance

The government has raised ₹18,454.42 crore through asset monetization and stake sales in PSUs, achieving 23% of its ₹80,000 crore FY27 target, crucial for managing fiscal deficit pressures exacerbated by rising subsidies and muted GST collections.

Key points

Asset Monetization: ₹6,366.93 crore raised through Infrastructure Investment Trusts (InvITs) for land monetization, marking a strategic shift in public asset utilization.

PSU Stake Sales: ₹7,808.49 crore generated from divestment in Central Bank of India (8.08% stake) and Coal India (2% stake), both oversubscribed indicating strong market interest.

NHPC Divestment: 6% stake sale via OFS route raised ₹4,279 crore, reducing government holding to 61.4% while maintaining majority control.

[GS3-Economy] Fiscal deficit reached 21.4% of FY27 target in April (₹3.62 trillion), driven by declining revenue and increased expenditure, making non-tax revenue critical for deficit management.

DIPAM Strategy: Accelerated disinvestment follows preparatory work in FY25-26, now prioritized due to fiscal pressures from Middle East conflict impacts on oil/fertilizer prices.

Green Shoe Option: Exercised in all three OFS (Central Bank, Coal India, NHPC) to meet excess demand, demonstrating flexible disinvestment mechanisms.

Historical Context: FY26 saw ₹16,885.56 crore from disinvestment and ₹28,420.49 crore from asset monetization, establishing a new revenue stream for the government.

[GS2-Governance] The process highlights institutional efficiency of Department of Investment and Public Asset Management (DIPAM) in executing complex stake sales.

Market Pricing: Floor prices set below market rates (₹31 for Central Bank, ₹412 for Coal India, ₹71 for NHPC) ensured investor participation while protecting public interest.

Way Forward: Government should institutionalize asset monetization through a transparent pipeline, prioritize strategic disinvestment of non-core PSUs, and link proceeds to capital expenditure for multiplier effects.

Key terms

Infrastructure Investment Trusts (InvITs)

Collective investment vehicles similar to mutual funds that enable monetization of infrastructure assets by pooling investor capital. For UPSC, relevant as a public finance tool under the National Monetization Pipeline to unlock value from brownfield assets without privatization.

Offer for Sale (OFS)

A mechanism for listed companies to divest shares through stock exchanges, introduced by SEBI in 2012. Crucial for UPSC as the primary route for government disinvestment, ensuring transparency and market-driven pricing.

Fiscal Deficit

The gap between government's total expenditure and total receipts (excluding borrowing), expressed as a percentage of GDP. For UPSC, key indicator of fiscal health with constitutional significance under FRBM Act targets (currently 4.3% for FY27).

Department of Investment and Public Asset Management (DIPAM)

Ministry of Finance department responsible for disinvestment and management of government equity in PSUs. Relevant for UPSC as the nodal agency implementing strategic disinvestment policy and asset monetization.