CII proposes a four-pronged privatisation strategy for Budget 2026-27 to fund development. It suggests a demand-based approach, a 3-year pipeline, a dedicated body, and phased disinvestment in PSEs to unlock nearly Rs 10 lakh crore.
To sustain capital expenditure and address developmental priorities amid global economic uncertainties, the industry chamber Confederation of Indian Industry (CII) in its proposals for the Union Budget 2026-27, has urged the Government to mobilise resources through a calibrated approach to privatisation, focusing on sectors where private participation can enhance efficiency, technology infusion, and global competitiveness.
Highlighting the strategic significance of privatisation in the current global economic landscape, Chandrajit Banerjee, Director General, CII, stated that India's growth story is increasingly being powered by private enterprise and innovation. "A forward-looking privatisation policy, aligned with the vision of Viksit Bharat, will enable the government to focus on its core functions while empowering the private sector to accelerate industrial transformation and job creation."
CII Outlines Four-Pronged Privatisation Strategy
Against this backdrop, CII has called for accelerating the implementation of the Government's Strategic Disinvestment Policy, which envisions an exit from all Public Sector Enterprises (PSEs) in non-strategic sectors and a minimal presence in strategic ones. The strong policy intent sets the direction for this national endeavour. To strengthen and expedite the privatisation programme, CII has outlined a four-pronged comprehensive strategy.
1. Shift to a Demand-Based Approach
First, CII recommends a shift to a demand-based approach in selecting PSEs for privatisation. Presently, the Government identifies specific enterprises for sale and subsequently invites investor interest. However, when sufficient demand or valuation is not achieved, the process often stalls, CII asserted. CII suggests reversing this sequence by first gauging investor interest across a broader set of enterprises and then prioritising those that attract stronger interest and meet valuation expectations. Such an approach, CII believes, would ensure smoother execution and better price discovery. Structured feedback from potential investors could also help address procedural or regulatory bottlenecks.
2. Announce a Three-Year Pipeline
Second, to provide investors greater clarity and planning time, CII recommends that the Government announce a rolling three-year privatisation pipeline, outlining which enterprises are likely to be taken up for privatisation during this period. This visibility, CII said, would encourage deeper investor engagement and more realistic valuation and price discovery, which would contribute towards expediting the privatisation process.
3. Establish a Dedicated Institutional Framework
Third, an institutional framework can strengthen oversight, accountability, and investor confidence, making privatisation predictable and professionally managed. CII recommends a dedicated body with a Ministerial Board for strategic guidance, an Advisory Board of industry and legal experts for independent benchmarking, and a professional management team to handle execution, due diligence, market engagement, and regulatory coordination. This structure would also monitor market developments, stakeholder feedback, and post-privatisation performance to enable continuous improvement, they suggested.
4. Adopt a Calibrated Disinvestment Roadmap
Fourth, recognising that full privatisation of all non-strategic PSEs is a complex and time-consuming, CII recommends a calibrated disinvestment approach combined with a three-year roadmap, as an interim measure. Government could reduce its stake in listed PSEs in a phased manner to 51 per cent initially, allowing it to remain the single largest shareholder while releasing significant value into the market, CII noted. Over time, this stake could be brought down further to between 33 and 26 per cent.
CII analysis shows that reducing the Government's stake to 51 per cent in 78 listed PSEs could unlock close to Rs 10 lakh crore.
In the first two years of the roadmap, disinvestment strategy could target 55 PSEs where the Government holds 75 per cent or less, mobilising around Rs. 4.6 lakh crore. In the subsequent stage, 23 PSEs with higher Government stakes (over 75 per cent) could be disinvested, potentially bringing in Rs 5.4 lakh crore.
Balancing Strategic Control with Value Creation
"A calibrated reduction of Government's stake in listed PSEs to 51 per cent and even lower is a pragmatic step that balances strategic control with value creation. Unlocking nearly Rs 10 lakh crore of productive capital would provide vital resources to accelerate physical and social infrastructure development and support fiscal consolidation", highlighted Banerjee.
These measures, CII concluded, can enhance investor confidence, ensure predictable and transparent processes, and maximize value realisation for the Government. By focusing on governance, regulation, and enabling infrastructure while allowing competitive markets to drive efficiency, strategic privatisation can unlock public resources for high-impact areas such as health, education, and green infrastructure, while retaining minimal presence in strategic sectors, supporting a self-reliant and globally competitive economy.
As is the convention, the Budget for 2026-27 will be presented on February 1. (ANI)
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