What’s behind India’s rush to sell shares in state-owned firms
Hello, this is Priyanka Salve, writing to you from Singapore.
Welcome to the latest edition of “Inside India“ — your one-stop destination for stories and developments from the world’s fastest-growing large economy.
The Indian government has been rushing to sell stakes in state-owned companies this year. So far, it has pared its stake in 10 public sector companies, raising more than 620 billion rupees ($6.5 billion) this year. This week, I unpack what’s driving India to meet its often-missed disinvestment target.
Any thoughts on today’s newsletter? Share them with the team.
The big story
It can be difficult to be the world’s fastest-growing large economy when inflationary pressures and fiscal constraints threaten to put the brakes on government spending.
But India cannot afford to lose its growth edge as it competes for the attention of global investors who have already put the country on the back burner as they focus on artificial intelligence-driven plays — something the South Asian country’s growth story has been missing.
So, to keep its growth engine running amid a widening fiscal deficit, the country is ramping up stake sales in state-owned companies, with the government offloading shares in 10 firms since the start of the year, despite dull market conditions.
The government has sold shares in several companies including Cochin Shipyard, Indian Railways Finance Corp, NHPC, and Coal India this year and, on Wednesday, it completed one of its biggest stake sale.
It raked in $3.3 billion by selling a 6.5% stake in the country’s top life insurer, Life Insurance Corporation of India. The share sale was priced at a 10% discount to attract buyers — unsurprisingly, it was oversubscribed.
While the government does have an obligation to reduce its stake in these businesses to comply with listing regulations, there has been a sudden and sharp rise in transactions this year.
The last time the Indian government met its disinvestment goal — target for stake sales in state-owned firms — was in the financial year ending March 2019.
The disinvestment rush
Excluding LIC, India has sold stakes in 9 state-owned firms in 2026 and raised nearly 270 billion rupees ($2.8 billion), its highest in more than 10 years, according to Indian market intelligence provider Prime Database.
And LIC alone surpasses that number by a good margin, signaling the state’s increasing proclivity toward raising funds without widening the fiscal deficit.
The government is well on its way to achieving its annual target of raising 800 billion rupees ($8.4 billion) through stake sales in state-owned enterprises, experts said, adding that these funds will be crucial for India as it faces deepening macroeconomic headwinds. The country has now met over 65% of its annual disinvestment target.
Buildings in Lower Parel area in Mumbai, India, on Tuesday, Sept. 9, 2025.
Bloomberg | Bloomberg | Getty Images
“Tapping into the divestment proceeds is a very good strategy,” Anubhuti Sahay, head…
Read More: What’s behind India’s rush to sell shares in state-owned firms