Budget 2026: CII Advocates for Demand-Driven Disinvestment Strategy with Four-Step Privatization Framework
The Confederation of Indian Industry (CII) has proposed a comprehensive four-fold strategy for the privatisation of public sector enterprises (PSEs) in its recommendations for the Union Budget 2026-27. The industry body emphasizes the need for a more efficient and predictable disinvestment process to enhance capital expenditure and support development priorities. CII Director General Chandrajit Banerjee stated that a well-structured privatisation policy would empower the private sector, fostering industrial transformation and job creation in alignment with the vision of a developed India.
Demand-Led Approach for Privatisation
CII’s first recommendation focuses on adopting a demand-led approach to identify which PSEs should be privatised. Instead of merely short-listing entities and gauging market interest afterward, the CII suggests that the government should first assess market appetite for a broader range of enterprises. This proactive strategy aims to identify PSEs that attract significant interest and valuation, thereby ensuring a more effective privatisation process. By understanding market dynamics upfront, the government can better align its disinvestment efforts with investor expectations and market conditions.
Establishing a Three-Year Privatisation Pipeline
To enhance transparency and investor confidence, CII advocates for the establishment of a rolling three-year privatisation pipeline. This initiative would provide potential investors with advance notice of upcoming disinvestment opportunities, allowing them ample time to plan their investments. CII believes that increased visibility into the privatisation schedule will deepen market participation and improve price discovery for the assets being sold. By clearly communicating its intentions, the government can foster a more competitive environment for privatisation, ultimately benefiting the economy.
Creating a Dedicated Oversight Mechanism
CII also calls for the creation of a dedicated institutional mechanism to oversee the privatisation process. This body would consist of a ministerial board to provide strategic direction, an advisory panel of industry and legal experts, and a professional execution team responsible for due diligence and regulatory coordination. By establishing a structured oversight framework, the government can ensure that the privatisation process is conducted efficiently and transparently. This approach aims to mitigate risks associated with disinvestment and enhance the overall effectiveness of the strategy.
Calibrated Disinvestment Strategy
Recognizing the complexities of complete privatisation, CII suggests a calibrated disinvestment approach as an interim solution. This strategy involves initially reducing government ownership in listed PSEs to 51%, allowing the government to retain management control while gradually lowering its stake further to between 33% and 26%. CII estimates that this reduction could unlock nearly Rs 10 lakh crore in value across 78 listed PSEs. The anticipated proceeds from disinvestment could significantly contribute to funding essential sectors such as healthcare, education, and green infrastructure, while also aiding in fiscal consolidation. The Union Budget for 2026-27 is set to be presented on February 1, and these recommendations could play a pivotal role in shaping the government’s financial strategy.
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