The government’s stake-selling agenda: If not now, then when?

livemint.com:

Markets have been hitting new highs almost every week and the total wealth in equity assets has also risen to all-time highs. Not surprisingly, promoters are set for record stock dilution. As per media reports, promoters of over 200 companies have cumulatively sold stock worth around $4 billion in the last two months alone, taking advantage of richer valuations and cashing-in on the equity they hold.

In this context, it is pertinent to note that the market capitalization of public sector undertakings (PSUs) has almost doubled from about $404 billion in 2022-23 to $804 billion currently. To put this number in context, total budgeted expenditure in the 2024-25 interim budget is about $560 billion. PSUs have attained record high returns on equity and PSU profits are expected to be around 2% of gross domestic product (GDP).

Almost every PSU and public sector bank (PSB) stock has seen a humongous rally, with these stocks significantly outperforming their private peers as well as the market. This must be a rather pleasant outcome for the Government of India, which, as a ‘promoter’ in a different class altogether, has reaped the benefits so far in the form of chunky dividends, but needs far more money to create infrastructure, generate jobs and strengthen economic engines. Not very long ago, the country was trapped in a vicious cycle of a twin-balance-sheet crisis, with the finances of corporates and banks both under stress.