Govt accelerates disinvestments to support revenues against backdrop of West Asia crisis

The Indian government has accelerated its disinvestment and asset monetisation plan in the current fiscal, raising about 31% of its full-year budgeted target in the first quarter itself. This is the fastest pace of disinvestment ever in the first quarter. In the period between mid-May and June of 2026, the government conducted one offer for sale every week for disinvestment of public sector enterprises.

The divestments are part of government’s all-round efforts to garner revenues, especially from the non-tax side, amid stress of increased expenditure on subsidy due to a higher import bill. It has set full year target of ₹80,000 crore envisaged in the FY27 Budget, to be raised from disinvestment and asset monetisation. It has raised ₹24,928 crore so far and already firmed up a pipeline of public sector companies to be divested in the current fiscal with hopes of exceeding the budgeted target.

Further, the West Asia crisis has pushed up the energy and fertiliser import prices, consequently the impact crisis is expected to widen the fiscal deficit more than budgeted estimates. The government’s move to boost miscellaneous capital receipts or disinvestment and asset monetisation in the current fiscal comes in the back drop of West Asia crisis.

As per government accounts, the fiscal deficit, which is the gap between income and expenditure, stood at over ₹1.62 lakh crore or 9.6% of FY27 Budget target in the first two months of the fiscal. The government has set a 4.3% fiscal deficit target for FY27.

Garnering budgeted revenues would be key to address the stress related to likely doubling of fertiliser subsidy bill to about Rs 3 lakh crore and crude oil imports amid the West Asia crisis, and the impact of the El Nino on the monsoon. Meanwhile, the government has discontinued fixing separate disinvestment targets since the Revised Estimate (RE) of FY2023-24.

Although, it kept ₹30,000 crore, ₹33,000 crore, ₹33,837 crore and ₹80,000 crore under Miscellaneous Capital Receipts for RE 2023-24, RE 2024-25, RE 2025-26 and BE 2026-27 respectively. These includes estimated receipts on account of management of equity investments and public assets through various mechanisms.