PSU Reforms: Govt May Cut Stake to 26% to Boost Disinvestment

New Delhi, March 17, 2026: India’s public sector is on the verge of a major transformation, as the government accelerates reforms in Central Public Sector Enterprises (CPSEs). Following bold recommendations in the Economic Survey 2025-26, policy discussions are now centered on reducing the government’s mandatory stake in listed PSUs to 26%, while retaining control through special rights — a move that could unlock billions in value, attract private investment, and boost efficiency.

26% Minimum Stake: What It Means

The Economic Survey proposed amending the Companies Act definition of a “government company,” allowing listed PSUs to operate with just a 26% government stake instead of the current 51% threshold. Key benefits include:

Unlocking value from under-monetized government holdings
Boosting private sector participation in non-strategic sectors
Enhancing governance and operational efficiency
Retaining management control via special resolutions and board influence

Finance Minister Nirmala Sitharaman has reaffirmed the government’s “full commitment” to the disinvestment agenda, confirming that all Cabinet-approved stake sales will proceed without delay. For FY27, the disinvestment target is set at ₹80,000 crore, reflecting a shift from headline targets to execution-focused outcomes.

Strategic vs. Non-Strategic Sectors

Under the New PSE Policy for Atmanirbhar Bharat, sectors are classified as:

Strategic Sectors: Limited PSU presence (atomic energy, defense, railways) with controlled private participation
Non-Strategic Sectors: Loss-making or inefficient PSUs to be privatized, merged, or closed to reduce fiscal strain

Parliamentary oversight is intensifying, with reviews of nearly two dozen CPSEs planned. High-profile cases, including the IDBI Bank sta