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Informist, Thursday, Jan. 29, 2026

NEW DELHI – The government can amend the Companies Act and revise the definition of "government company" to allow stake sales beyond 51% while retaining "government company" status, the Economic Survey for 2025-26 (Apr-Mar) said Thursday. Receipts from disinvestment can also be strengthened by reducing government equity in certain public sector undertakings beyond the minimum public shareholding norms, guided by market conditions and enterprise-specific factors, the survey, tabled in Parliament, said.

As per the Securities and Exchange Board of India's Securities Contract (Regulation) Rules, all listed companies, including public sector companies, must have a minimum public shareholding of 25%.

Currently, in about 30% of listed PSUs, government shareholding is already below 60%, limiting further disinvestment through the offer-for-sale route, since the government must hold at least 51% stake in the company for it be a state-owned entity. The survey, authored by a team led by Chief Economic Adviser V. Anantha Nageswaran, said that since effective control in a company requires only about a 26% stake, the government could consider amending the definition of "government company" under the Companies Act, limited to listed entities, to allow them to remain as government companies with a minimum of 26% ownership, thereby retaining special resolution rights, while enabling the government to monetise its stake.

Alternatively, if the objective is eventual privatisation of a PSU, the government could continue phased offer-for-sale below 51% and even towards full exit, without changing the legal definition of "government company", the survey suggested. "This would enable CPSEs to function post-disinvestment as professionally managed entities with dispersed ownership, clear governance standards, and transparent succession frameworks," it said. 

These suggestions come as the government has seen limited success in its disinvestment plan. Lower revenue from non-debt capital receipts impacts the government's fiscal math. 

The Economic Survey also noted that a portion of disinvestment receipts could be earmarked for strategic investments in emerging technology and innovation-driven companies through professionally managed platforms such as the National Investment and Infrastructure Fund, thereby recycling public capital toward future growth sectors. "This will also ensure a steady stream of disinvestment receipts into the future," the survey said.  End

Reported by Priyasmita Dutta

Edited by Saji George Titus

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