Union Budget 2026: What govt could earn from divestment process and why it matters 

The Modi government will present its 15th Budget on February 1, 2026. The government's disinvestment policy, involves selling minority or strategic stakes in Public Sector Enterprises (CPSEs) to collect funds, improve efficiency, and encourage public ownership. The government will propose a divestment target for the next financial year on February 1 to boost its income. In most instances, the government has struggled to meet its divestment targets. 

In the Budget 2025, the government set a disinvestment and asset monetisation target for 2025-26 at Rs 47,000 crore, lower than the budget target of 2024-25 (Rs 50,000 crore). 

However, it has been able to raise nearly Rs 8,768 crore till date via the stake sale process in the PSUs. Analysts expect the government to set a realistic divestment target with some of them favouring a  lower divestment target to ensure maximum proceeds from the stake sale. 

Ajay Garg, Director & CEO, SMC Global Securities said, "For FY27, the government is likely to set a realistic divestment target in the range of Rs 60,000–Rs 80,000 crore, prioritising credibility over aggressive numbers. The focus is expected to remain on strategic stake sales, minority stake dilution through ETFs, and offer-for-sale (OFS) routes rather than big-ticket privatisations. Key offerings could include further stake sales in PSU banks, defence PSUs, and energy companies, along with continued monetisation via CPSE ETFs. Companies with strong market appetite and stable earnings visibility will be preferred to ensure smooth execution."

FULL COVERAGE:  Union Budget 2026

Shrey Jain Founder and CEO SAS Online - India's Deep Discount Broker said, "The FM may keep the divestment target around Rs 50,000 crore for FY2025. This year, the government may achieve the target, given the buoyancy in the stock markets; and robust operational and financial matrix of PSUs. The government has done the ground work in a few PSUs by separating the non-operating assets (land, buildings etc), and listing those entities on the stock exchange. In these stocks, the government is most likely to divest its stake before March 2026. Investors should buy these PSU stocks with strong operating history, on dips, as the divestment process may rerate them."

Narendra Solanki, Head Fundamental Research - Investment Services, Anand Rathi Shares and Stock Brokers is of the view that gradual divestment in business would continue in non strategic businesses.

Manish Chowdhury, Head of Research, StoxBox said, "Achieving the divestment target is crucial for the government as it constitutes significant non-tax revenue, impacting fiscal planning and deficit targets if missed. The recent years have seen targets unmet, prompting a downward revision to Rs 30,000 crore from Rs 50,000 crore to manage expectations. However, considering robust tax collections at the Centre and challenges involved in smoothly divesting stake in government entities, we do not expect an ambitious divestment target from the government in this budget."

Apurva Sheth, Head of Market Perspectives & Research, SAMCO Securities suggests that the goverment is not likely to fix a divestment target this financial year. 

"The track record of previous two governments headed by PM Modi since 2014 has been very poor and unpredictable with respect to divestment of PSUs. The finance minister sets the ambitious divestment target in the Budget and it misses the target. Hardly anything fruitful has happened on this front in last 10 years. I think based on its previous performance, the Government will refrain from announcing any targets this time and will set its sights on due divestment candidates like Bank of Maharashtra, IDBI Bank, SCI and selling some more stake in LIC of India through FPO. These stocks' reaction to divestment announcement will depend on various factors like issue size, price, market condition and sentiment etc," said Sheth. 

Chirag Jain, CEO at Ashika Credit Capital said, "A realistic target would be around Rs 50,000 to Rs 75,000 crore. The focus should stay on small stake sales via CPSE ETFs and follow-on offerings, instead of big-ticket strategic divestments. Names like IDBI Bank and select listed CPSEs could remain in focus."

Nandish Shah, AVP, Research & Advisory, (Fundamental) Wealth Management, Motilal Oswal Financial Services said, "We assume a disinvestment target of Rs 45,000 crore, marginally lower than last year's Rs 47000 crore. On the public sector front, we anticipate continued evolution of the government's disinvestment & PSU strategy, shifting from outright asset sales toward business revamps and selective stake monetisation; this includes the anticipated restructuring of IDBI Bank, potential stake changes in LIC, and consolidation of smaller PSU banks to create larger, more robust entities akin to SBI and HDFC."

Maulik Patel, Head of Research, Equirus Securities said, "The government has set an asset monetization target of Rs 10 lakh crore (under NMP 2.0) between FY26 and FY31. Hence, robust revenue mobilization through disinvestment is expected. With the significant overhaul in direct taxes in recent years, the government's focus on asset monetization will be reenergized. If the NMP 2.0 is taken as an indication, roads, railways, and power are likely to be the key areas of monetization."

Kamal Poddar, MD, Choice International said, "Divestment in Budget 2026 is likely to reflect pragmatism rather than grand announcements. The conversation has clearly shifted from headline privatization to calibrated stake dilution and asset monetization."

Ajay Garg, Director & CEO, SMC Global Securities said, "For FY27, the government is likely to set a realistic divestment target in the range of Rs 60,000 crore to Rs 80,000 crore, prioritising credibility over aggressive numbers. The focus is expected to remain on strategic stake sales, minority stake dilution through ETFs, and offer-for-sale (OFS) routes rather than big-ticket privatisations. Key offerings could include further stake sales in PSU banks, defence PSUs, and energy companies, along with continued monetization via CPSE ETFs. Companies with strong market appetite and stable earnings visibility will be preferred to ensure smooth execution. Asset monetization through InvITs and REITs, especially in roads, power transmission and pipelines, could also supplement divestment receipts. Overall, the government is likely to balance market conditions, valuation comfort, and fiscal needs rather than chasing ambitious privatisation headlines."