Actually, if you were to look at it, the government is in a Catch-22 situation. The government needs to raise money to fund its stimulus program, which has become inevitable after the COVID driven slowdown in the economy. At the same time, market is not conducive for aggressive disinvestment due to the highly uncertain market conditions.

The government is also in trouble on the revenues front. With fiscal deficit above 5% and threatening to go above 6%, there is only so much the government can borrow from the market. RBI reserves are depleted and deficit financing by RBI has begun. The need of the hour is genuine inflows at a time when tax and GST collections are already under pressure.

That is one of the reasons the government is now talking about raising Rs.20,000 crore by divesting the government stake in Coal India and IDBI Bank. Selling the stake in the market will not be too productive as both are available at cheap valuations. It may only amount to selling the family silver at a throwaway price at the bottom of the price cycle.

Another option is to ask these companies to buy back. Coal India has adequate cash reserves but using it for buybacks jeopardizes the expansion plans. CIL must function like a listed enterprise. In the IDBI case, LIC may have to fund the buyback, which will only make the IPO of LIC less attractive. Even through, the government has deployed buybacks and special dividend in the past, it is best avoided now.