Budget 2020: LIC to helm new disinvestment push as govt sets steep $29.55 billion target

Although the government did not give a roadmap for listing LIC, it said that Rs 900 billion will be achieved via stake sales in state-owned banks and financial institutions.

"It will be a big positive for corporate governance and transparency and will open up one more avenue for fundraising for the government over the years," said Krishna Kumar Karwa, managing director of Emkay Global Financial Services.

The government also announced its plans to sell its stake in IDBI Bank, a private lender, in which it owns 47.11 percent stake which at the current stock price will be valued at approximately Rs 150 billion ($2.11 billion).

IDBI Bank has been weighed down by poor asset quality with its gross non-performing assets standing at 29.4 percent in the quarter ended September 30, when it also posted a loss of Rs 34.59 billion.

The government also tweaked the personal tax structure in the budget. The revision, which allows individuals to move to a lower tax regime if they do not invest in long-term avenues such as insurance, may end up disincentivizing savings, warned Archit Gupta, CEO of ClearTax, a financial technology company.

The move dented sentiment around shares in insurers, which closed in the red after a special trading session on Saturday.

India, the world's second-biggest gold consumer, also said it plans to set up an International Bullion exchange at the Gujarat International Finance Tec-City, or GIFT City.

This "is a positive step towards making gold a mainstream asset class...An organized bullion trading system will benefit the entire supply chain," said Somasundaram P.R., the managing director of World Gold Council's Indian operations.