The government has set a divestment target of Rs 2.1 lakh crore for FY21 on the back of planned listing of LIC and privatisation of Air India and BPCL, and it's around Rs 1 lakh crore more than the FY20 goal of Rs 1.05 lakh crore.

The government has made divestment worth Rs 18,094.59 crore this year, so far.

Finance Minister Nirmala Sitharaman said on Saturday the government would sell a part of its stake in Life Insurance Corporation (LIC) through initial public offering (IPO). It, along with Air India, BPCL and others, is expected to contribute substantially to the FY21 divestment target.

LIC, fully owned by the government, is a big investor in share sales, including IPOs of state-run companies.

The Rs 2.1 lakh crore FY21 target is far above the analyst estimates of Rs 1 lakh crore.

"Listing on the stock exchanges disciplines the company, provides access to financial markets and unlocks value. It also gives an opportunity to retail investors to take part in the wealth so created," said Sitharaman.

This year's share sale included two IPOs -- Rail Vikas Nigam (Rs 475.89 crore) and IRCTC (Rs 637.97 crore) -- an OFS by RITES amounting to Rs 730 crore, CPSE ETF worth Rs 10,000 crore and Bharat 22 ETF at Rs 4,368.80 crore. The government also sold enemy shares worth Rs 1,881.21 crore, as per the Dipam.

"LIC has been used as a sovereign fund to support market sentiments. With it's disinvestment, such direct involvement of the government in the market, will get truncated", said Vishwas Panjiar, Partner Nangia Andersen