DIPAM builds in-house policy model to guide FY26 disinvestment push

The Budget 2025-26 has kept a target of Rs 47,000 crore for divestment combined with asset monetisation

The Finance Ministry’s Department of Investment and Public Asset Management (DIPAM) has developed an internal policy model to guide the timing of disinvestment transactions in 2025–26, aiming to maximise value realisation and improve execution of stake sales in Central Public Sector Enterprises (CPSEs), a senior government official said.

The new model, structured as a four-block framework, will help assess prevailing market conditions, investor appetite, and sector-specific trends to identify optimal windows for strategic sales and Offer for Sale (OFS) transactions. The move marks a shift towards a more data-driven approach for timing decisions, he said.

“Strategies will be calibrated to market conditions. We use the available tool kit and assess as per market conditions. It's part of an organised structure — an in-house policy model. It links dividend policy to market prices, and the framework decides what to sell and at what time, based on data-driven signals and sectoral analysis,” the official said.

The official explained that the model comprises four key analytical blocks. “Block 1 links dividend flows with PSU performance. Block 2 connects dividend policy with asset prices. Block 3 solves the trade-off between market timing and dividend yield, while Block 4 uses volume-weighted average price to derive timing decisions,” the official added.

He noted that DIPAM had recalibrated its strategy based on past market learnings and would now continue OFS alongside asset monetisation in the coming fiscal. “We recalibrated our strategy. Going forward we will continue OFS along with asset monetisation,” the official said.

The policy framework also aligns with DIPAM’s aim to streamline internal decision-making on what to sell, when to sell, and at what valuation, using empirical data. The new framework, if successfully implemented, could offer a more structured approach to addressing the timing challenges, especially in volatile markets.

The model comes in the wake of the Budget 2025-26 target of Rs 47,000 crore for divestment combined with asset monetisation. Disinvestment receipts are likely to play a critical role in meeting the goal.

A major hurdle in India’s disinvestment programme is that several strategic sale transactions are delayed, leading to value erosion. These include divestment plans of Shipping Corporation of India, NMDC Steel Limited (NSL) and Bharat Earth Movers (BEML), among others.