Why is Govt Asking Mutual Funds to Invest in PSU Shares?

The government wants mutual fund managers to invest more in PSU (public sector undertakings)  stocks. The Department of Investment and Public Asset Management (DIPAM) is pitching a major PSU makeover, aiming to change the perception of these stocks.

PSUs have often been seen as slow-moving, but the govt believes they’re now undervalued with strong growth potential. By getting mutual funds to promote these stocks, they hope to attract more retail and institutional investors. This could drive up share prices and improve market sentiment around PSUs.

The move is part of a larger plan to modernise state-run companies, improve efficiency, and increase profitability. If successful, it could mean better returns for investors and more funds for the govt through divestment.

For mutual funds, this could mean new opportunities, but they’ll need to carefully assess risks. If PSUs deliver on reforms, they could become a smart bet for long-term investors. The govt’s push signals confidence in India’s public sector revival.