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Centre’s revenue focus has shifted from selling PSUs to earning more from them, data shows

February 28, 2026 5 min read Economics Polity & Governance GS3 (Economy) GS2 (Polity & Governance)
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What Happened

  • A data analysis of government finances reveals a structural shift in how the Centre extracts revenue from Public Sector Enterprises (CPSEs): from the earlier emphasis on disinvestment (selling equity stakes) to maximising dividend and other income from retained PSUs
  • Dividend receipts from CPSEs grew from ₹39,750 crore in 2020-21 to ₹74,128.6 crore by 2024-25, with ₹59,730.6 crore collected so far in 2025-26
  • In contrast, disinvestment proceeds in 2025-26 stood at only ₹15,562.8 crore — far below the ambitious disinvestment targets the government had set in earlier years
  • Several policy signals confirm the shift: removal of a separate "Disinvestment" heading in Budget documents; emphasis on the National Monetisation Pipeline (NMP) over privatisation; DIPAM's 2020 advisory to CPSEs urging consistent dividend policies
  • Since 2016, strategic disinvestment has been approved for 36 CPSEs, but only 13 transactions have been completed

Static Topic Bridges

Disinvestment Policy in India — Historical Evolution and DIPAM

Disinvestment refers to the government's action of reducing its ownership stake in CPSEs (Central Public Sector Enterprises) through sale of shares. India's disinvestment policy has evolved through multiple phases since the early 1990s, from token minority stake sales to full privatization in some cases.

  • Origins: Disinvestment in India began in 1991-92 as part of economic liberalization; initially involved minority stake sales to mutual funds (LIC, UTI) through "bundle sales"
  • Institutional evolution: Disinvestment Commission set up 1996 (under Ministry of Industries); separate Department of Disinvestment formed 1999; upgraded to full Ministry of Disinvestment under Vajpayee government (2001); merged back into Finance Ministry (2004); renamed as DIPAM (Department of Investment and Public Asset Management) on April 14, 2016
  • DIPAM role: Manages the government's equity portfolio in CPSEs; handles disinvestment transactions (strategic sale, minority stake sales, buybacks, OFS); also manages Specified Undertaking of the Unit Trust of India (SUUTI) assets
  • New PSE Policy 2021 (Atma Nirbhar Bharat): Notified February 4, 2021; defines 4 strategic sectors where government will maintain minimal but definite presence (atomic energy, space, defence, banking/insurance); all CPSEs in non-strategic sectors eligible for privatisation or closure
  • Strategic disinvestment: Sale of government equity exceeding 50% along with transfer of management control; distinct from minority stake sale through OFS (Offer for Sale) — which does NOT transfer management
  • Key strategic disinvestment: Air India (December 2021; sold to Tata Sons — first privatization of a government airline); CONCOR (Container Corporation of India) — strategic disinvestment remains pending

Connection to this news: The government's retreat from disinvestment targets reflects both the political difficulty of privatisation (resistance from employees, unions, and coalition pressures) and a pragmatic discovery that CPSEs can generate substantial and growing dividend flows without requiring sale.

Dividend Policy for CPSEs — DIPAM Guidelines and DPE Framework

The Ministry of Finance through DIPAM issued comprehensive guidelines in November 2020 for a "consistent dividend policy" for CPSEs, advising them to pay higher dividends where financially feasible. The Department of Public Enterprises (DPE) under Ministry of Finance separately monitors CPSE performance.

  • DIPAM Dividend Advisory (November 2020): Advised CPSE CEOs and MDs to pay dividends of at least 30% of PAT (Profit After Tax) or 4% of net worth, whichever is higher — unless capex requirements or regulatory capital needs justify lower payouts
  • Dividend types received by government: (a) Dividends on equity holdings in CPSEs; (b) Dividends from RBI (the largest single dividend payer — ₹2.11 lakh crore transferred to government in FY25 as surplus transfer, a record); (c) Dividends from subsidiaries held through holding CPSEs
  • Top CPSE dividend payers: Coal India (consistently one of the largest), ONGC, NTPC, BEL, BHEL, Hindustan Zinc (government stake via Vedanta), Power Finance Corporation (PFC), REC Limited
  • RBI Surplus Transfer: Distinct from regular CPSE dividends; governed by Section 47 of the RBI Act; the RBI transfers its surplus (after meeting contingency reserves) to the government; the Bimal Jalan Committee (2018-19) revised the Economic Capital Framework determining how much surplus RBI transfers
  • Maharatna/Navratna/Miniratna: CPSEs are categorized by size and performance into Maharatna (highest: >₹5,000 crore average net profit, >₹15,000 crore average net worth), Navratna, and Miniratna categories, with progressively more operational autonomy

Connection to this news: The consistent dividend policy framework operationalizes the government's shift from privatisation to "earn more from what you own" — CPSEs are now expected to be high-dividend-paying entities rather than candidates for sale.

National Monetisation Pipeline (NMP) — Asset Monetisation Without Ownership Transfer

The National Monetisation Pipeline (NMP), launched in August 2021 for FY2022-26, is a mechanism to unlock value from brownfield (already built) government infrastructure assets through long-term leases to private operators — without transferring ownership. This is distinct from disinvestment (which involves equity sale).

  • NMP target: ₹6 lakh crore aggregate asset monetisation over FY22-FY25
  • Mechanism: Government retains ownership; private sector operates assets under concessions, right-to-use agreements, or lease arrangements; generates upfront revenue and periodic payments
  • Key asset classes in NMP: Railways (stations, track sections), National Highways (operational roads for TOT — Toll-Operate-Transfer), Power transmission lines (PGCIL assets), Airports (AAI airports), Telecom towers (BSNL/MTNL), Oil & Gas pipelines, Warehousing (FCI, CWC), Sports stadia, Mining blocks
  • Comparison with disinvestment: NMP generates revenue without relinquishing government control; disinvestment reduces government ownership (partially or fully)
  • National Infrastructure Pipeline (NIP): Separate but related — NIP (₹111 lakh crore, FY2020-25) is the investment pipeline for new infrastructure; NMP monetises existing brownfield assets to fund part of NIP
  • DIPAM's evolving role: Initially set up to handle equity disinvestment; now encompasses broader asset management including OFS, buybacks, and oversight of NMP processes

Connection to this news: The pivot to dividends and the NMP together represent a "manage not sell" philosophy: the government extracts growing revenue flows from its PSU portfolio while retaining strategic control and avoiding the political costs of privatisation.

Key Facts & Data

  • DIPAM renamed from Department of Disinvestments: April 14, 2016
  • New PSE Policy notified: February 4, 2021
  • CPSE dividend receipts in 2020-21: ₹39,750 crore
  • CPSE dividend receipts in 2024-25: ₹74,128.6 crore
  • Disinvestment proceeds in 2025-26 (so far): ₹15,562.8 crore
  • CPSEs approved for strategic disinvestment since 2016: 36 (13 completed, rest pending)
  • NMP target: ₹6 lakh crore over FY22-FY25
  • DIPAM Dividend Advisory: November 2020 — minimum 30% of PAT or 4% of net worth
  • Air India privatisation completed: December 2021 (Tata Sons)
  • RBI surplus transfer to government in FY25: ₹2.11 lakh crore (record)
  • Bimal Jalan Committee: 2018-19; revised RBI's Economic Capital Framework