Dividends to save govt's disinvestment shortfall, high hopes on IDBI

The government is increasingly leaning on dividend income to offset a shortfall in disinvestment receipts, even as it places high expectations on the strategic sale of IDBI Bank to bolster capital receipts in the next fiscal.

Data from the Department of Investment and Public Asset Management (DIPAM) shows that total receipts so far this year stand at Rs 58,328 crore. A bulk of this, Rs 49,560 crore has come through dividends from public sector enterprises, while disinvestment receipts remain limited at Rs 8,768 crore.

Against this backdrop, the proposed strategic disinvestment of IDBI Bank has assumed critical importance in the Union Budget calculations for FY 2025–26.

With the transaction already running behind schedule, senior Finance Ministry officials said that most regulatory clearances are now in place and efforts are underway to call for financial bids at the earliest. However, officials declined to comment on whether the process could face further delays or spill over beyond March. “Our efforts are to do it with the best due diligence,” one official said.

As per sources, the Share Purchase Agreement (SPA) for IDBI Bank received clearance from the Inter-Ministerial Group in June and was subsequently approved by the core group of secretaries after multiple rounds of clarifications. However, financial bids, which were earlier expected to be invited in November, are yet to be called. According to sources, the delay was partly due to clarifications sought by the three shortlisted bidders on the draft SPA.

Based on current market valuations, the total proceeds from the IDBI Bank stake sale could be around Rs 63,000 crore. The government plans to divest 30.48 per cent of its 45.48 per cent holding, which could fetch over Rs 31,700 crore. This is expected to form the bulk of receipts under the head “Miscellaneous Capital Receipts” in FY26, a category that has replaced the earlier disinvestment terminology and now covers proceeds from the management of equity investments and public assets.

The government since then has stopped setting a separate numerical target for disinvestment proceeds, signalling a shift away from rigid benchmarks.