What you need to remember is that the Budget did not announced the increase in public shareholding limit but only committed to refer the matter to SEBI for further consideration. There was no commitment in the budget. The idea was to make more shares available to the public in quality companies that were still closely held. So, the government surely had its heart in the right place because it would address the issue of liquidity and also the issue of asset price inflation that we have been seeing in equities for quite some time.

In the last few weeks, the backlash from the markets has been quite severe. Hike in public shareholding will force large companies like TCS, Wipro and D-Mart to mandatorily dilute their stake. Markets were worried that in this midst of bearish sentiments this could result in additional floating stock of around $50 billion in the market and depress valuations. What the government has now clarified is that the proposal to increase the public shareholding from 25% to 35% has been put off for the time being and will be considered at a future date.