Disinvestment receipts have chronically fallen short of budget estimates. Examine the reasons and suggest measures to make disinvestment a dependable fiscal tool.

Disinvestment is the sale of government equity in CPSEs. It is meant to be a non-debt capital receipt that funds the budget without extra borrowing. Yet actual receipts met budget estimates only in 2017-18 and 2018-19 [1]. In FY22, only ₹9,330 crore had come in by late January against a record ₹1.75 lakh crore target [2]. The shortfall is structural, not cyclical.

Reasons for the chronic shortfall

• Timeline mismatch: a strategic sale needs valuation, bidders and good market conditions, which rarely fit inside one budget year. Only 4 of 24 CPSEs approved for strategic sale had been sold by 2018-19 [3].
• Optimistic annual targets: the FY23 target was ₹65,000 crore [4], but receipts were ₹30,184 crore. FY24 fell further, to ₹15,220 crore [5].
• Weak private appetite: state entities fill the gap. LIC bought most of the Rail Vikas Nigam shares [6]. The CAG called NTPC's acquisitions "sector consolidation" [7].
• Valuation risk: in the Kamarajar Port sale, undocumented discounts changed the reserve price by about ₹576 crore [7]. This invites audit scrutiny and makes officials cautious.
• Political economy: union resistance, worries about job security and reservation, and market volatility delay OFS and IPO timing.

Measures to make disinvestment dependable

• Multi-year rolling pipeline: publish a sale calendar and review it every year, as NITI Aayog's National Monetisation Pipeline does with its ₹6 lakh crore, four-year plan [8].
• Policy consistency: follow the New PSE Policy, 2021, which keeps a minimum presence in four strategic sectors and privatises or closes CPSEs in the rest [9]. This gives investors predictability.
• Transparent valuation: write down valuation assumptions, apply them the same way in every sale, and have an Independent External Monitor check them while the sale is under way [7].
• Honest accounting: report sales to government buyers separately from sales to private buyers in budget documents.
• Ring-fence proceeds for capital creation: use the National Investment Fund route, which funded asset-creating schemes like MGNREGA and IAY in 2009-12 [10]. This avoids "selling the family silver" to pay recurring expenditure.
• Bridge strategy: use calibrated minority OFS sales while strategic sales mature, with employee share options and social safeguards to reduce resistance.

The shortfalls come from treating a multi-year structural reform as a single annual revenue line. A rolling pipeline, transparent valuation and capex-linked use of proceeds can make disinvestment a credible pillar of fiscal consolidation under the FRBM framework. That would release locked public capital while advancing the New PSE Policy's vision of a leaner, more efficient State.