In the last few months, the government has sold its stake in several companies one after the other through ‘Offer for Sale’ (OFS) mode, raising thousands of crores of rupees. Apart from this, discussions are going on to sell stake in many other big companies also. This year alone, the government has sold stake worth more than ₹12,000 crore in three companies, while deals worth more than ₹4,000 crore are in the pipeline. The government is selling its stake in public sector companies (PSUs) at a time when there is a lot of volatility across the world. The Indian currency has declined, and the stock market has also seen a sustained decline, reaching its lowest level in a year. In this environment, an important question arises: Why has the government suddenly started selling its stake in companies so rapidly? Is the government facing liquidity crunch? Or is there really a big crisis coming? This report tries to find concrete answers to these questions.
The central government has sold stake in three big companies through OFS during the financial year 2026-27. In May 2026, the government raised ₹2,266 crore by selling 8.08% stake in Central Bank of India. Also, in the same month, the government raised ₹5,000 crore by selling 2% stake in another government company, Coal India. On June 3, 2026, the government launched OFS to sell 6% stake in NHPC Limited, aiming to raise ₹4,300 crore. Earlier, in February 2026, the government had raised ₹4,422 crore by selling 5% stake in BHEL.
Why is the government selling stake in companies? In fact, the government’s decision to sell stake in public sector companies (PSUs) is not just to raise money; Rather, it is driven by a number of economic, financial and market-related objectives. This does not mean that there is a shortage of money in the country or that some major crisis is about to occur. The government is selling its stake for many different reasons. Let’s see what these reasons are…
In the current Budget, the government plans to raise ₹80,000 crore in FY 2026-27 through disinvestment – mainly by selling its stake in public sector undertakings. This is important because the government spends a lot every year on important sectors like roads, railways, defence, healthcare, education and various welfare schemes. As a result, by selling a part of its stake in government companies, the government can raise capital without imposing any new taxes. Currently, the government has raised – or is in the process of raising – ₹12,000 crore by selling stakes in companies like Coal India, NHPC, BHEL and the Central Bank of India.
**Controlling fiscal deficit**
When the government’s revenue falls short of its expenditure, the fiscal deficit increases. The proceeds from share sale – or disinvestment – play an important role in reducing this loss.
**SEBI compliance**
According to the country’s market regulator – Securities and Exchange Board of India (SEBI), listed companies are required to maintain at least 25% public shareholding. In many public sector companies, the government’s stake is more than 75%. Therefore, to ensure compliance with these rules, the government is required to reduce its stake from time to time.
**Increasing liquidity of shares**
When the number of shares available in the stock market increases, the trading volume increases, making it easier to buy and sell shares. This enables better pricing of the company’s shares and attracts large institutional investors, which increases liquidity in the market and strengthens both the company’s shares and the broader market.
**Will the government lose its control over these companies by selling its stake?** Even after selling its stake in Coal India, the government continues to hold 60% controlling stake. Similarly, the government stake in NHPC Limited is expected to be around 65%. In companies like LIC, the government still holds 96.5% stake. Companies in which the government holds 75% or more stake are most likely to launch OFS or IPO.
In which companies are discussions going on to sell stake?
In the financial year 2026-27, the government is planning to raise thousands of crores of rupees by selling its stake in several companies. This initiative includes bringing IPO for two companies and ‘Offer for Sale’ (OFS) for several other companies. Apart from this, the government can also sell stake through ‘Follow-on Public Offer’ (FPO).
LIC is also included among the companies which are being discussed the most for the upcoming OFS. The government can sell 1 to 2 percent stake in this insurance company, which is expected to raise around ₹10,000 crore.
The government is also considering selling stake in IRFC through OFS. Apart from this, discussions are also going on to sell stake in Rail Vikas Nigam.
The government has already sold its stake in IRCTC, and now once again there is talk of selling stake in this company.
The government also has a significant stake in REC Limited, and now there is talk of selling some part of this stake.
The government has already reduced its stake in Indian Overseas Bank, and is likely to further reduce its stake once again. Apart from this, OFS can also be considered for Bank of Maharashtra.
The government is also considering IPOs for two public sector companies—Export Credit Guarantee Corporation (ECGC) and India Infrastructure Finance Company Limited (IIFCL).
Government often falls short of its fund raising targets
Although the government keeps selling its stake in public sector companies one after another, it consistently fails to achieve its annual fund raising targets. In its annual budget plan, the government formulates strategies to raise funds through IPO, OFS or other means to meet expenditure on health, roads, railways, defence, and various government schemes; But, often it falls behind in raising the estimated amount. If we look at the data of the last five years, we find that the government had set a total target of raising around ₹2.25 lakh crore, but it could only raise ₹92,384 crore. This is a matter of concern for the government.
Although the figures given above show that there is no problem, there is still room for concern. It is often seen that the government usually brings out ‘Offer for Sale’ (OFS) or IPO for public sector enterprises only when the stock market is near its record high or when the overall market conditions are favourable. However, this time the government is issuing OFS at a time when the Indian market is under pressure and has seen a significant decline since the beginning of January. NIFTY has fallen by about 11 percent this year, while Sensex has fallen by 13 percent. As a result, the government has been forced to sell its stake in these companies at low valuations. However, this situation may also depend on the government’s own financial needs.
