
Budget: Govt pegs divestment, asset monetisation proceeds at ₹47,000 cr; raises PSU dividend target to ₹69,000 cr

Summary
- The government is also maintaining its strategy of not having a separate disinvestment target, which began with the Union Budget of February 2024.
The government expects to bring in ₹47,000 crore through disinvestment and asset monetisation in FY26, which is lower than the ₹50,000 crore it expects to get in FY25, according to estimates in the Budget documents. The estimate, which has been categorised under 'miscellaneous capital receipts for FY26’ is higher than the revised estimate for FY25, which has been lowered to ₹33,000 crore, the documents revealed.
The government is also maintaining its strategy of not having a separate disinvestment target, which began with the Union Budget of February 2024. The lower estimate of FY26 compared with FY25 underscores the government’s approach of taking a limited number of assets to the market for strategic disinvestment and minority stake sales.
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“Last year’s [general] elections slowed down the process. My sense is asset monetisation will be pursued in a big way this year as they embark on the second phase," said Madan Sabnavis, chief economist at Bank of Baroda.
The department of investment and public asset management (DIPAM) is going ahead with its strategic disinvestment of IDBI Bank, which will spill over to FY26 as financial bidders are identified and approved by the Reserve Bank of India.
Stake sales in BEML, Shipping Corporation of India, HLL Lifecare Ltd, and Project & Development India Ltd are also ongoing, but most are progressing slowly. Stake sales in other entities such as Container Corporation of India are yet to be taken up, while some – including those of Bharat Petroleum Corporation Ltd and Pawan Hans – have been scrapped.
Dividend target increased
The government said it intends to look at disinvestment and dividends holistically, since dividends from public-sector stocks that would otherwise have been sold will add to its overall receipts. It will continue with its strategy of focusing on wealth creation and creating value for shareholders.
Finance secretary Tuhin Kanta Pandey said, “There is no disinvestment target per se. Disinvestment and dividend are both looked at together because both are money and money is fungible. It has five elements, including CPSE performance, communication of that performance, capex of the CPSE, which is important in terms of accelerating growth, consistent dividend policy, and a calibrated disinvestment strategy. About ₹80,000 crore to ₹90,000 crore are raised every year from both dividends and disinvestment in a manner that is beneficial to the minority share in our listed companies."
A clear indication of this strategy is the increase in dividends from public sector units in FY26 to ₹69,000 crore, which is higher than the FY25 budget estimate of ₹56,260 crore and revised estimate of ₹55,000 crore. The FY26 estimate is higher than the actual proceeds of ₹65,381 crore in FY24.
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Finance minister Nirmala Sitharaman said the government would conduct a second phase of the Asset Monetisation Plan, first announced in 2021, which aimed to unlock value from underused or non-core government assets and use the proceeds to build new infrastructure. “Building on the success of the first Asset Monetization Plan announced in 2021, the second Plan for 2025-30 will be launched to plough back capital of ₹10 [trillion] in new projects," Sitharaman said.
₹6 trillion potential
The plan involves identifying assets from various ministries under the National Monetisation Pipeline for a four-year period. NMP has estimated aggregate monetisation potential of ₹6 trillion through core assets of the central government from FY22 to FY25. Roads, railways, telecom, power transmission and generation are among the top five sectors from which assets worth ₹4.2 trillion have been identified for monetisation.
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According to data from Niti Aayog, the central government has monetised assets worth ₹3.85 trillion since FY22. Of this, ₹1.56 trillion was raised from private participation in infrastructure in FY24. That year, the ministries of road transport and highways and coal were the top two performers, bringing in a combined ₹97,000 crore.
The data showed the total target for the first two years, FY22 and FY23, was around ₹2.5 trillion, of which around ₹2.30 trillion was achieved. During FY24, ₹1.56 trillion was brought in against a target of ₹1.8 trillion.