Government Set To Beat ₹80,000 Crore Disinvestment Target For First Time Since FY19 After IDBI Bank Sale
Add Preferred News Source
The Centre entered FY27 with an ₹80,000 crore disinvestment and asset monetisation target. With ₹62,124 crore already raised, proceeds from the IDBI Bank sale could push collections beyond the full-year estimate.
The Centre is set to exceed its ₹80,000 crore FY27 disinvestment and asset monetisation target after the Cabinet approved the IDBI Bank stake sale to Fairfax Financial Holdings-backed Canada Inc, putting total receipts on course to cross ₹88,000 crore.
The government had already raised ₹62,124 crore through disinvestment and asset monetisation as of September 10, leaving it around ₹17,876 crore short of the full-year target. The sale of its 30.48% stake in IDBI Bank is expected to bring in around ₹26,000 crore, more than enough to bridge the gap.
If the transaction is completed within the current financial year as planned, total receipts could rise to around ₹88,000 crore, exceeding the Budget target by roughly ₹8,000 crore. It would also mark the first time since FY19 that the Centre has surpassed its original target.
The Cabinet Committee on Economic Affairs on Wednesday approved the sale of a combined 60.72% stake held by the government and Life Insurance Corporation of India (LIC) in IDBI Bank to Fairfax-backed Canada Inc for ₹52,878.08 crore.
IDBI Bank Stake Sale To Push FY27 Receipts Above Target
The Centre had budgeted ₹80,000 crore from disinvestment and asset monetisation for FY27.
Of the ₹62,124 crore raised as of September 10, ₹55,757 crore came from disinvestment and ₹6,367 crore from asset monetisation. This means the government had already achieved nearly 78% of its full-year target before proceeds from the IDBI Bank transaction.
Under the IDBI Bank deal, the government will sell 30.48% while LIC will divest 30.24%. Fairfax-backed Canada Inc will acquire the combined 60.72% stake at ₹81 per share.
The government's share of the transaction is expected to fetch around ₹26,000 crore. Adding this to receipts already raised during FY27 could take the total beyond ₹88,000 crore.
The final figure could be higher if the Centre completes further stake sales or asset monetisation transactions before the end of the financial year.
After the IDBI Bank transaction, the government's holding in the lender will fall to 15%, while LIC will retain around 19%. Fairfax-backed Canada Inc will become the new promoter and take management control.
Government Could Beat Target For First Time Since FY19
The Centre last exceeded its original disinvestment target in FY19, when it raised ₹84,972 crore against a Budget target of ₹80,000 crore.
Since then, receipts have repeatedly fallen short of the targets initially set by the government. The IDBI Bank transaction could reverse that trend in FY27, with the deal alone expected to push combined disinvestment and asset monetisation receipts above the year's Budget estimate.
The transaction is expected to close during the current financial year after the remaining regulatory and procedural requirements are completed.
The government has also retained a 15% stake in IDBI Bank, which can be sold subsequently through the open market under the prescribed process.
At ₹52,878.08 crore, the Fairfax-IDBI Bank transaction is also set to become the largest foreign direct investment in India's financial sector, according to the government.
This article is for informational purposes only and should not be considered investment advice from Kotak Neo. For compliance T&C and disclaimers, Visit www.kotakneo.com/disclaimer
Rochelle Britto has spent 8+ years decoding India's markets, businesses, and consumer economy, reporting for ET Prime and Times Internet along the way, covering the stories behind the numbers.
A Mumbai native and perpetual planner of the next holiday, she stays far, far away from the eternal question, “Where are we going next?” When she's not chasing headlines, she's chasing new cultures, open roads, and a bit of quiet in nature.
Right Tools, Rich Insights
