Budget 2026: Govt sets ₹80,000 cr disinvestment target for FY27, 136% YoY jump despite repeated misses

The Union Budget 2026 has set an ambitious disinvestment target of ₹80,000 crore for FY27, sharply higher than recent years, even as the government continues to miss its asset sale goals year after year.

Budget documents released after Finance Minister Nirmala Sitharaman’s speech on February 1 show that the FY27 target represents a steep 136% jump over the revised estimate of ₹33,800 crore for FY26. So far in the current fiscal, the government has raised only ₹8,800 crore through disinvestment, highlighting the persistent gap between budgeted targets and actual realisations.

Estimates missed repeatedly over the years

Disinvestment receipts have consistently undershot estimates in recent years. Actual proceeds stood at ₹16,500 crore in FY24 and ₹10,200 crore in FY25, compared with budget estimates of ₹51,000 crore and ₹50,000 crore, respectively, underscoring the challenge of using asset sales as a dependable source of non-tax revenue.

Despite the track record, the government reiterated its commitment to privatisation and public sector reforms. “All our disinvestments which have been approved by the Cabinet earlier — that list will continue to be before us and we will carry forward every such divestment,” Sitharaman said at the post-Budget press conference.

CPSE REITs to accelerate asset monetisation

Presenting her ninth consecutive Budget in Parliament, Sitharaman also proposed accelerating the monetisation of significant real estate assets owned by Central Public Sector Enterprises (CPSEs) through the creation of dedicated Real Estate Investment Trusts (REITs). The move aims to unlock value from underutilised government-owned real estate and recycle capital into fresh infrastructure development.

Industry participants welcomed the proposal, noting its potential to deepen the asset monetisation framework. “By positioning REITs as a key mechanism for asset monetisation, the Budget reinforces their growing role in India’s infrastructure financing ecosystem,” the Indian REITs Association said in a statement. “Dedicated CPSE REITs can accelerate capital recycling, improve balance-sheet efficiency for public enterprises, and expand access to high-quality, income-generating assets for a wider investor base through transparent and regulated instruments.”

Markets see renewed intent, but remain cautious

Market participants said the sharp rise in the FY27 disinvestment target signals a renewed push for asset monetisation. “The disinvestment target has been raised sharply to ₹80,000 crore versus about ₹30,000 crore earlier. The budget is very positive and captures many key announcements,” said Amisha Vora, Chairperson and Managing Director at PL Capital – Prabhudas Lilladher.

Brokerages, however, remain cautious on execution. Analysts pointed out that disinvestment proceeds have declined sharply over the years — from nearly ₹85,000 crore in FY19 to just ₹8,800 crore so far in FY26 — raising questions about the government’s ability to meet large headline targets.

HSBC Global Investment Research said the higher disinvestment target is central to the government’s fiscal arithmetic, and expects proceeds to rise by around 0.1% of GDP in FY27, even as growth in other non-tax revenues moderates due to lower telecom spectrum receipts and softer dividend growth from the RBI and public sector enterprises.

Nomura, however, flagged risks to these assumptions. “While nominal GDP growth of 10% is achievable and gross tax revenue growth appears conservative, the disinvestment target of ₹80,000 crore looks optimistic at first glance,” said Sonal Varma, Managing Director and Chief Economist for India and Asia (ex-Japan).

JM Financial, in a pre-Budget report, said disinvestment is unlikely to emerge as a major fiscal lever in the near term, as the government remains focused on value creation through operational autonomy, governance reforms and improved practices before pursuing meaningful equity dilution.

IDBI Bank stake sale on cards

The government is currently looking to sell around a 30.5% stake in IDBI Bank, which could help it meet its disinvestment goals, although some reports suggest the transaction may spill over into the next financial year. If executed, it would mark the first major disinvestment by value since the LIC IPO in FY23, which raised ₹20,500 crore, with recent years largely limited to smaller stake sales via offer-for-sale routes.

Motilal Oswal, in a recent report, said the government’s PSU strategy is increasingly shifting away from outright asset sales towards business revamps and selective stake monetisation. This includes the restructuring of IDBI Bank, potential stake changes in LIC, and consolidation of smaller PSU banks to create stronger entities along the lines of SBI and HDFC Bank.

The brokerage added that around a dozen PSU banks are currently on the government’s radar, with discussions centred on mergers of smaller banks to strengthen balance sheets and support long-term growth, while traditional focus sectors such as defence, nuclear energy, electronics and power are expected to continue receiving strong budgetary support under the broader structural reform agenda.