Disinvestment as key economic strategy, Pg9

Key Highlights:

• Disinvestment and asset monetisation helped the government navigate a challenging fiscal year 2026-27 amidst global uncertainty and high energy prices.
• In April-September 2026, the Centre mobilised ₹62,124 crore through disinvestment and asset monetisation.
• Disinvestment alone contributed ₹55,757 crore, reaching 78% of the full-year budget target of ₹80,000 crore.
• The government's approval of the sale of its share in IDBI Bank on October 14 is expected to exceed the disinvestment target.
• The IDBI Bank sale is considered one of India's largest Foreign Direct Investment (FDI) deals in the financial sector.

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Detailed Insights:

• The fiscal year 2026-27 was marked by modest growth in net tax and non-tax revenues, while capital expenditure increased by over 18%.
• The fiscal deficit reached 42% of budgeted levels, highlighting the need for diversified revenue sources.
• Disinvestment is viewed as a policy choice to unlock value from public assets, widen public ownership, and improve efficiency.
• The LIC IPO in 2022 is cited as an example of widening public ownership through disinvestment.
• The New Public Sector Enterprise (PSE) Policy 2021 aims for a "bare minimum presence" of PSEs in strategic sectors.
• The National Monetisation Pipeline (NMP), with NMP 2.0 targeting ₹16.72 lakh crore for FY26-30, focuses on re-engaging capital via mature public assets.
• The IDBI Bank strategic sale is the first significant one since Air India in 2022, signaling a 'Privatisation 2.0' framework.
• This new privatisation framework is intended to be investor-led, professionally managed, and time-bound.
• Suggestions for future disinvestments include a demand-based approach and a rolling three-year privatisation stream for better price discovery.
• Calibrated disinvestment, reducing government stake to 51% in 95 listed PSEs, could generate approximately ₹9 lakh crore.

Key Concepts Involved:

• Disinvestment: The process by which a government or an organization sells or liquidates an asset or subsidiary.
• Asset Monetisation: Creating new revenue streams by unlocking the value of underutilized public assets through various mechanisms.
• Fiscal Deficit: The difference between the government's total expenditure and its total revenue, excluding borrowings.
• Strategic Sale: The sale of a significant portion of government equity in a Public Sector Enterprise, often involving transfer of management control.