The government’s recent sale of a 6.5% stake in LIC raised over ₹31,500 crore, highlighting a strategic shift in India’s public sector stake sales from mere fiscal revenue to a broader market-making role amid rising public listings.
The government’s sale of a 6.5 per cent stake in Life Insurance Corporation of India last week raised about ₹31,552 crore and became the largest offer for sale ever completed in India. The transaction, carried out on August 4 and 5 at a floor price of ₹382 a share, was heavily oversubscribed, allowing the state to use the full green-shoe option, while also lifting LIC’s public float to 10 per cent, ahead of the Securities and Exchange Board of India’s May 16, 2027 deadline.
The latest divestment is only the second time the Centre has pared its holding in LIC since the insurer’s landmark 2022 listing. Before that flotation, the government owned the company outright. The 2022 initial public offering sold 3.5 per cent at ₹949 a share and brought in about ₹21,000 crore, leaving the state with a 96.5 per cent stake. After last week’s sale, the government’s ownership has fallen to 90 per cent.
LIC’s latest stake sale also fits into a broader pattern in which disinvestment targets have often outpaced actual receipts. Business Standard’s review of past Budget documents shows that the government surpassed its goals only briefly in FY18 and FY19, when collections reached ₹1,00,045 crore and ₹94,727 crore, respectively. The gap widened sharply in FY21 and FY22, when pandemic-related disruption and delayed transactions left receipts far below the headline targets of ₹2.10 trillion and ₹1.75 trillion. More recent years have still fallen short: the government raised ₹31,106.64 crore in FY23, with LIC’s IPO accounting for ₹20,516.12 crore, and ₹16,507.29 crore in FY24, well below the revised expectations for both years.
The LIC transaction is also one of the clearest examples of how public sector stake sales have evolved from a narrow fiscal exercise into a wider market-making tool. Disinvestment has long supplied the bulk of India’s non-debt capital receipts, at times accounting for roughly 70 to 85 per cent of the total, although that share has become harder to track cleanly since FY24, when disinvestment and asset monetisation were grouped together. At the same time, the number of listed central public sector enterprises and related government-backed entities has risen to 74 by mid-2026, compared with about 50 in 2016-17, underscoring how successive listings and follow-on sales have expanded public participation in state-owned businesses.
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