To sell 2% of a PSU the government destroyed 10% of its market cap. Nobody cared about the impact cost of disinvestment borne by existing shareholders. For the government to hit its targets, shareholders were made to pay dearly. Naturally, nobody trusts the government anymore and preferred selling PSUs at any valuation.

But, this situation clearly became untenable. So, the government decided it had to do a strategic sale of companies rather than sell minority stakes. While we all agree that government has no business to be in business, it is not as simple as it appears. Stakeholders rarely agree on what is the best way to deal with this problem.

But, the current slowdown has given the government the political capital to accelerate sale of companies. The list of companies will be out next week. Or, so the market excitement suggests. While the timing may not be finite, what is certain is that the highest levels of the government are rethinking disinvestment.

The market will love the shift from tactical share sales to strategic sales of PSUs. Watch this space.

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