Cut threshold for govt co classification to 26 pc stake; use OFS-route for privatisation: Survey

New Delhi, Jan 29 (PTI) The Economic Survey on Thursday recommended that the government should consider amending the definition of a government company, reducing the minimum threshold to 26 per cent from the current 51 per cent.

This is based on the premise that effective control can often be maintained even with a 26 per cent stake, as this level of ownership generally allows for special resolution rights that can influence key company decisions.

For PSUs listed for privatisation, the survey authored by Chief Economic Advisor V Anantha Nageswaran and his team suggested that the government could continue phased OFS below 51 per cent and even towards the full exit. This may be done without changing the legal definition of "government company".

Since 2016, in-principle approval has been accorded for strategic disinvestment or privatisation in 36 CPSEs, of which 13 transactions have been completed, with the remainder at various stages of implementation.

Besides, in about 30 per cent of listed CPSEs, government shareholding is already below 60 per cent. This limits the scope for further disinvestment through offer for sale (OFS), as the Companies Act stipulates that a 'government company' must have at least 51 per cent of its stake held by the central or state government.

"Since effective control requires only about a 26 per cent 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 per cent ownership, thereby retaining special resolution rights, while enabling the government to monetise its stake," the survey said.

It further said that if the objective is eventual privatisation, the government could continue "phased OFS below 51 per cent and even towards full exit", without changing the legal definition of 'government company'.

This means that the privatisation-bound CPSE will continue to have the public sector tag till the government completely exits from the company.

This would enable CPSEs to function post-disinvestment as professionally managed entities with dispersed ownership, clear governance standards, and transparent succession frameworks, the survey said.

Strategic disinvestment has progressed in a calibrated manner over recent years. During FY26, approvals were also accorded for stake dilution or exit from select joint ventures, including NTPC’s divestment from Utility Powertech Ltd. These actions were complemented by governance reforms that empowered CPSE Boards to undertake the closure, merger, or disinvestment of subsidiaries, the survey said.

During the current fiscal, 3 OFS transactions were undertaken – in Mazagon Dock Shipbuilders Ltd, Bank of Maharashtra and Indian Overseas Bank, mobilising around Rs 7,717 crore. In addition, remittances from SUUTI totalled approximately Rs 1,051 crore during the year, and InvIT-based monetisation yielded Rs 18,837 crore. PTI JD ANZ CS JD BAL BAL