Centre on track to top ₹50,000 crore from stake sales, IPO push in FY26; IDBI Bank shares may fetch ₹30,000 crore
India's government anticipates surpassing its target for miscellaneous capital receipts in FY26, driven by strategic asset sales and IPOs, including a major stake sale in IDBI Bank. This is crucial for balancing fiscal needs.
New Delhi: The Central government is on track to exceed its estimates for miscellaneous capital receipts in FY26 to over ₹50,000 crore, buoyed by a pipeline of offers for sale, strategic stake sales, and possible initial public offerings in state-run companies, two people aware of the matter said.
The long-awaited sale of the government’s and Life Insurance Corporation of India’s combined 94% stake in IDBI Bank is expected to be completed within the fiscal year, adding significant inflows to the government’s revenue, the people said.
An initial public offering (IPO) of a public sector company in the natural resources space is expected, which could involve either a state-run enterprise or one of its subsidiaries, depending on market conditions, the people added. The Centre also expects significant proceeds from offers for sale (OFS) of equity in other listed public sector undertakings (PSUs) during the ongoing fiscal year.
Although the government has stopped setting standalone disinvestment targets since FY24, the budget estimate for miscellaneous capital receipts, which includes proceeds from equity dilution and asset monetisation, is pegged at ₹47,000 crore for FY26. For FY25, the target was revised to ₹33,000 crore from the originally budgeted ₹50,000 crore.
“With multiple transactions in advanced stages, the proceeds are expected to comfortably surpass the current estimate," one person said on condition of anonymity. “However, unlike earlier, the focus is on value creation and timing transactions to favourable market conditions rather than merely meeting headline targets."
A spokesperson of the finance ministry didn't respond to emailed queries seeking comment on the government’s asset sales plans.
Economists noted that disinvestment receipts form a key part of the government's revenue, helping bridge the gap between receipts and expenditure and contain the fiscal deficit.
Investor confidence
“In the first five months, the MCR has been nearly half of the budgeted amount of ₹47,000 crore. These are important in a year such as FY26 when nominal GDP growth is likely to be significantly lower than the budget estimate," said Devendra Pant, chief economist at India Ratings & Research. "If the government is able to overachieve its MCR target, it will compensate for some of the expected slowdown in tax revenue."
Pant said the success of any IPO and OFS would depend on factors such as market sentiment, liquidity, inflation and growth.
"If the terms of these offers are lucrative, it may generate demand among investors and would help in establishing confidence among the investor community," he added.
The central government last surpassed its annual disinvestment target in FY19, marking the second consecutive year it achieved this feat. In FY19, it raised ₹94,700 crore from disinvestment, surpassing its ₹80,000 crore target. The proceeds came through a mix of IPOs, share buybacks, and exchange-traded funds.
In FY18, the central government collected a little over ₹1 lakh crore, far exceeding its ₹72,500 crore goal, driven largely by Oil and Natural Gas Corporation’s acquisition of Hindustan Petroleum Corporation Ltd.
Divestment proceeds totalled about ₹10,000 crore in FY25, driven largely by the government’s minority stake sales in General Insurance Corporation of India ( ₹2,345.55 crore), Cochin Shipyard Ltd ( ₹2,015.32 crore), and Hindustan Zinc Ltd ( ₹3,449.18 crore), among others.
Long-term value
“By pacing transactions strategically and tapping buoyant sectors like renewables and financial services, the Centre hopes to unlock greater long-term value while maintaining investor confidence in public sector assets," said the second person, who also requested anonymity. “During FY26, the stake sale in IDBI Bank is likely to fetch about ₹30,000 crore, while ₹10,000-15,000 crore could come from the offer for sale of equity in other listed public sector undertakings."
Meanwhile, the finance ministry has started holding weekly reviews of public sector enterprises (PSEs) to ensure they stay on track with investment targets and continue supporting growth amid global uncertainties and the absence of a significant pickup in private capex.
“PSEs will maintain their performance milestones and capital expenditure plans to sustain the economy’s growth momentum," the second person added.
However, there's still no plan yet to revive the strategic sale of state-owned fertilizer companies during FY26, the first person said. In 2022, Niti Aayog had identified eight fertilizer PSUs for strategic sale, but the Centre put the plan on hold the following year as it prioritised increasing domestic production.
The companies include Brahmaputra Valley Fertilizer Corp. Ltd, Fertilizers and Chemicals Travancore, FCI Aravali Gypsum and Mineral Ltd, Madras Fertilizers Ltd, National Fertilizers Ltd, Rashtriya Chemicals & Fertilizers, Fertilizer Corp. India Ltd, and Hindustan Fertilizer Corp. Ltd.
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