The Cabinet Committee on Economic Affairs, chaired by Prime Minister Shri Narendra Modi has accorded 'in-principle' approval for enabling reduction of Government of India paid-up share capital below 51% in select CPSEs while retaining the management control on case to case basis, taking into account the Government shareholding, and the shareholding of Government-controlled institution.

Benefits:

This is intended to widen the bandwidth of disinvestment window in select CPSEs. This will also help in pursuing the objectives of disinvestment i.e. spreading the wealth of the nation among a greater number of people, promoting efficient management of Government investment in CPSEs and ensuring greater transparency and increasing contribution of the CPSEs towards higher economic growth of the nation.

It would also increase the free float available in the market which may have positive impact on Foreign Portfolio Investments in Indian capital markets and in creation of wider investment space for retail and institutional investors and may increase in the market premium of CPSEs due to likely positive investors perception.

Reduction of public equity permits lowering government share below majority while retaining management control, expanding disinvestment options. Cabinet approval authorises reduction of Government equity below 51% in selected CPSEs while retaining management control, to be applied on a case to case basis after assessing Government and Government controlled institution shareholding; the policy aims to widen the disinvestment window, increase free float, promote efficient management and transparency, and attract broader investor participation.