Economic Survey suggests lowering government stake threshold to 26% to enable further PSU disinvestment

The Economic Survey has suggested amending the definition of a ‘government company’ to allow a reduction in stake to 26% in listed state-run companies and further monetise government holdings. If the government accepts this recommendation, it will pave the way for reducing stakes in blue-chip companies like ONGC, SBI and Powergrid, among others. Under existing regulations in the Companies Act, a government company should have at least a 51% stake held by the central or state government.

The survey noted that at present, in about 30% of listed central public sector enterprises, government shareholding is already below 60%, which limits further disinvestment through the offer-for-sale route. “Since effective control requires only about 26%, the government could consider amending the definition of ‘government company’ under the Companies Act, limited to listed entities,” it said. The survey also suggested that as an alternative, the government could continue phased OFS below 51% and even towards full exit, without changing the legal definition of government company. “This would enable CPSEs to function post-disinvestment as professionally managed entities with dispersed ownership, clear governance standards, and transparent succession frameworks,” it noted.