These are all false notions. The main reason for this decision is not lazy/inefficient govt/PSU employees or extra efficient private sector or any such common misgivings but the SEBI's 25% norms.
If its not obeyed by govt, SEBI may penalize the government and cap its listings in the stock market.
The 25 per cent MPS norms were introduced in 2013, whereby no listed company was permitted to have more than 75 per cent promoter stake. The rules were aimed at improving liquidity and better stock price discovery by making higher float available...
more... with public. The average promoter holding in India is among the highest globally. Last year, the government had proposed to increase the minimum public float from the current 25 per cent to 35 per cent. But is has been not yet finalized