Here’s how PSUs are coming to the rescue of the Exchequer

In a year of uncertain revenues and higher spending, the Centre may get some comfort from higher-than-estimated proceeds from stake sales and dividends from public sector enterprises.
 
With the blockbuster offer for sale in Life Insurance Corporation of India raising over Rs 31,000 crore earlier this week, the Centre is close to meeting the Rs 80,000 crore target it had set this fiscal from miscellaneous receipts, which is the umbrella term for proceeds from disinvestments, dividends and asset monetisation in PSUs.

As per the latest data, the Centre has already raised Rs 61,636 crore from miscellaneous receipts, and indications are that it could once again top Rs 1 lakh crore in this fiscal. So far, disinvestment proceeds have fetched Rs 52,716.02 crore. Asset monetisation has brought in Rs 6,366.93 crore and PSU dividends amount to Rs 2,553.43 crore.

While the 6.5% disinvestment in the Centre’s equity in LIC through an OFS raised nearly Rs 31,515 crore, the government has also done several other stake sales, including those in Coal India, NHPC and GIC India.

Sources indicate that the Centre will continue to do small rounds of disinvestment in the coming months, as the strategy has served well despite geopolitical tensions and market volatility. Meanwhile, dividends from PSUs tend to be announced in the latter half of the year and will continue to accrue in the coming months. Asset monetisation also continues to be an important priority for the Centre.

Both the Department of Investment and Public Asset Management (DIPAM) as well as the Department of Public Enterprises have a list of PSUs to focus on and have been continuously reviewing strategies, sources noted.

The improved revenue from PSU disinvestments and dividends is expected to help cushion the impact of the West Asia conflict on the domestic economy. In the first quarter of the fiscal, the Centre’s fiscal deficit came in at 18.2% of the full-year target with revenue receipts at Rs 1.01 lakh crore, marginally higher than the corresponding period in FY26. However, total expenditure was also higher at Rs 1.35 lakh crore in the first three months of the fiscal, with a 7.4% increase in revenue expenditure as subsidies increased by 37%, led by fertiliser.’

For FY27, the Centre had set a target of 4.3% of the fiscal deficit, but a mid-year recalibration of the Budget math is expected due to the impact of the West Asia war.