New Delhi: As the government prepares for Union Budget 2026, one of the major policy signals from the Economic Survey is a renewed push towards deeper disinvestment in public sector companies. The survey has recommended that the definition of a government company be changed to allow the Centre to retain control even with just a 26 percent stake, instead of the current 51 percent requirement.
At present, a company is classified as a government entity only if the Centre or a state government holds a majority stake. This restricts the government’s ability to meaningfully dilute equity in listed PSUs. The Economic Survey argues that even with 26 percent ownership, the government can still exercise strategic control through veto rights on key decisions, while unlocking significant value from its holdings.
From a Budget 2026 perspective, this proposal is being seen as a strong signal that the government may shift towards large-scale equity monetisation instead of slow, one-off privatisation deals. Lowering the threshold would allow the government to raise funds by selling shares in profitable PSUs without fully exiting them.
If implemented, this change could impact several major companies such as ONGC, SBI, Power Grid, NTPC and other listed PSUs. Stake sales through offers for sale (OFS) or market placements could generate substantial non-tax revenue, helping the government meet fiscal targets without increasing borrowing.
Economists believe this approach fits well with the government’s broader fiscal strategy — reducing dependence on debt, improving capital efficiency and attracting greater private participation in state-run enterprises. It may also improve corporate governance by increasing market discipline and professional management in PSUs.
For investors, the move could lead to higher free float, better liquidity and potentially improved valuations in select PSU stocks. For the government, it provides a sustainable and repeatable revenue stream rather than relying on asset sales or tax hikes.
As Budget 2026 approaches, markets will closely watch whether the government formally adopts this recommendation through legislative changes or new disinvestment targets. A shift to the 26 percent model could mark the biggest reform in India’s disinvestment policy in over two decades.
