New Delhi, Nov. 13 -- The Indian government last month announced the sale of a combined 60.72% stake held by the Centre and the state-run Life Insurance Corporation of India (LIC) in IDBI Bank to a Fairfax Financial Holdings-controlled entity for Rs.52,878 crore. The government and LIC will still hold a total of 34% stake after the transaction is concluded.

More than a change in ownership, the transaction, which has drawn employee protests, is a test of how India protects public value while pursuing economic reform.

The government has offered a detailed defence of the sale price. Both initial bids fell short of the first reserve price of Rs.94.42 a share. Fresh valuations by KPMG India, using market multiples, and BDO Valuation Advisory...