India’s Big Plans for Selling Government Shares: Rs 11.5 Trillion Potential
India could potentially raise Rs 11.5 trillion by selling shares in public sector enterprises, banks, and insurance firms while keeping at least 51% control, according to CareEdge Ratings. This is more than double the Rs 5.2 trillion divested since 2014.
Of the Rs 11.5 trillion potential, public sector enterprises could contribute around Rs 5 trillion, while public sector banks and insurance firms could add another Rs 6.5 trillion. However, the government may not sell all potential shares due to strategic, financial, and social considerations.
Rajani Sinha, Chief Economist at CareEdge Ratings, emphasized the need for a fresh look at divestment strategies, especially for consistently loss-making companies. She noted that the end of the election season and high stock market levels provide a good opportunity for significant divestments.
Despite favorable market conditions, past issues like procedural delays and litigations have slowed divestment efforts. The 2023-24 divestment target was missed, achieving only Rs 165 billion of the revised Rs 300 billion goal.
Future plans include big-ticket divestments like the Shipping Corporation of India, which could generate Rs 125-225 billion if the government sells its entire stake. CareEdge believes the government will maintain its 2024-25 divestment target at Rs 500 billion.
Additionally, the government has monetized assets worth Rs 1.6 trillion under the National Monetization Pipeline in 2023-24, against a target of Rs 1.8 trillion.
