Will India Sell Its Crown Jewels to Pay for the Oil War Bill?

The US-Iran war that began in late February 2026 has pushed global crude oil prices up by roughly 30%, hitting India harder than most because the country imports nearly 90% of its crude needs. Petrol and diesel prices have already risen by about 8%, fertiliser subsidies may climb 20%, and the government has had to cut fuel taxes, losing 140 billion rupees in monthly revenue. All this puts the fiscal deficit target of 4.3% of GDP under serious strain, with estimates ranging from 4.7% to as high as 5%.

To cushion the budget from this oil shock, the government has quietly lined up stake sales in eight state-owned companies, led by Life Insurance Corporation and Hindustan Zinc. The LIC share sale alone could raise up to 100 billion rupees, and Hindustan Zinc may fetch another 50 billion rupees, while officials are holding weekly meetings with investment bankers to finalise timelines and pricing. In the April to June quarter, the government already raised close to $2 billion from share sales, which surpassed total disinvestment proceeds from each of the past three fiscal years.

The IDBI Bank privatisation, a long-pending deal with Fairfax, Emirates NBD, and Kotak Mahindra as bidders, remains the most complex piece of this puzzle. Earlier bids came in below the reserve price, so the government is now considering fresh bids and a lower reserve price to close the deal by FY27. The bigger test is whether markets, already under pressure from $29 billion in foreign fund outflows in the first half of 2026, will absorb this wave of state-run equity offerings alongside mega IPOs from Jio Platforms and the National Stock Exchange.