The Confederation of Indian Industry (CII) has put forward a significant set of recommendations for the upcoming Union Budget 2026-27, centering on a strategic and accelerated privatisation drive. The industry body has proposed a clear four-step process designed to make the government's exit from non-strategic businesses faster and more predictable.
The Core Rationale: Funding Growth and Efficiency
CII argues that a well-calibrated privatisation policy is crucial for sustaining high levels of capital expenditure and financing key national development priorities. The body believes increased private participation in certain sectors can lead to better efficiency, faster adoption of new technologies, and enhanced global competitiveness.
Chandrajit Banerjee, the Director General of CII, emphasized the private sector's role. He stated that a forward-looking privatisation policy, aligned with the Viksit Bharat vision, would allow the government to concentrate on its core functions. Simultaneously, it would empower private enterprises to drive industrial transformation and generate employment, as reported by ANI.
CII's Four-Pronged Privatisation Strategy
To translate this vision into action, CII has outlined a detailed four-part strategy to accelerate the government's disinvestment from non-strategic Public Sector Enterprises (PSEs).
First, a Demand-Led Selection Process: Instead of the government creating a shortlist of PSEs and then testing market appetite, CII recommends reversing the approach. The government should begin by gauging investor interest for a broader list of entities. Only those companies that attract strong market interest and promise better valuation should be shortlisted for privatisation.
Second, A Transparent Three-Year Pipeline: CII has called for the government to announce a rolling three-year privatisation pipeline in advance. This would provide greater visibility to potential investors, giving them ample time to plan, encouraging deeper participation, and ultimately leading to improved price discovery during the sale process.
Third, A Dedicated Institutional Mechanism: Recognising the complexity of large-scale asset sales, CII proposes setting up a specialised body to oversee the entire privatisation process. This mechanism would comprise a ministerial board for strategic guidance, an advisory panel of industry and legal experts, and a professional execution team to handle due diligence, market engagement, and regulatory coordination.
The Calibrated Path and Potential Financial Windfall
Fourth, A Phased Disinvestment Route: Acknowledging that complete privatisation can be complex, CII suggests a calibrated, step-by-step disinvestment model as an interim measure. The government could first reduce its stake in listed PSEs to 51%, retaining management control. In a subsequent phase, the stake could be brought down further to between 26% and 33%.
CII has quantified the massive potential of this approach. It estimates that reducing the government's ownership to 51% in 78 listed PSEs could unlock nearly Rs 10 lakh crore. The plan envisions raising about Rs 4.6 lakh crore in the first two years from 55 PSEs, followed by an additional Rs 5.4 lakh crore from 23 more enterprises.
Banerjee explained that this calibrated reduction balances strategic government control with value creation for the public exchequer. The substantial proceeds, he noted, could be strategically deployed to fund critical areas like healthcare, education, green infrastructure, and fiscal consolidation, while the government maintains control in genuinely strategic sectors.
The Union Budget for the financial year 2026-27 is scheduled to be presented in Parliament on February 1, 2026. CII's recommendations are expected to feed into the government's pre-budget consultations as it charts the economic course for the coming year.
