Budget 2026: Govt should have a clear road map for disinvestment target

One of the more notable features of the Union Budget this year is its reliance on disinvestment and asset monetisation. The Budget has projected raising ₹80,000 crore under miscellaneous capital receipts — read as disinvestment and asset monetisation — for 2026-27. That is a sharp increase from ₹33,837 crore in the revised estimates for 2025-26 and ₹17,202 crore in actual collections in 2024-25. However, realising the ambition will depend on planning, market conditions, and the government’s ability to manage institutional constraints. It has been observed for many years in the past that the government declares a big target but is unable to achieve it for one reason or another.

 

Even for 2025-26, miscellaneous capital receipts were budgeted at ₹47,000 crore, but were later revised down. As the Economic Survey 2025-26 noted, disinvestment during the year focused largely on market-based transactions. Three offer-for-sale transactions — in Mazagon Dock Shipbuilders Ltd, Bank of Maharashtra, and Indian Overseas Bank — mobilised around ₹7,717 crore, while remittances from the Specified Undertaking of the Unit Trust of India added approximately ₹1,051 crore. Infrastructure monetisation through infrastructure investment trusts yielded another ₹18,837 crore. Strategic disinvestment has progressed slowly, with only 13 transactions completed out of 36 central public-sector enterprises (CPSEs) approved in principle since 2016, reflecting persistent legal and procedural bottlenecks.

 

The fiscal context reinforces the importance of these receipts. The central government’s debt-to-gross domestic product (GDP) ratio has been projected to be 55.6 per cent, down from 56.1 per cent in the revised estimates for 2025-26. The government is aiming to reduce the debt-to-GDP ratio to 50 (±1) per cent by the end of March 2031. Achieving this will require sustained fiscal consolidation. Since the government intends to sustain the momentum on capital expenditure to support economic growth, which is a sensible choice, disinvestment receipts will be useful in this regard. It can help attain the objective of sustaining higher capital expenditure along with fiscal consolidation. As an industry body recently noted, reducing the government’s stake to 51 per cent in 78 listed CPSEs can help unlock value worth about ₹10 trillion. The government could also choose to list the unlisted CPSEs to unlock value. In fact, to revive the disinvestment programme in a major way, the government needs to revisit its strategic disinvestment policy, which was announced in the 2021-22 Budget. It promised to keep a minimal presence in the strategic sectors. CPSEs in the non-strategic sectors were to be completely privatised or closed.

 

Implementing the policy will not only help raise resources but also revive market sentiment. The government is also reported to have a healthy asset-monetisation pipeline. Therefore, in a way, the target of ₹80,000 crore for 2026-27 represents a policy test. Its realisation will depend less on favourable market conditions and more on the government’s ability to articulate a clear road map and sequence transactions suitably. It might also have to overcome some political opposition, which is one of the reasons why governments over the years have been hesitant to aggressively pursue disinvestment.