The cabinet is expected to clear the plan to cut majority stake in around 20 state-run firms on Wednesday. These firms also include several profit-making entities.
This step of cabinet is being considered as a restart of equity sale in public sector companies after a 12-year gap.
There will also be a detailed review of the plan to shed 10% stake in public sector general insurance companies. The move is aimed at helping the insurers raise funds to take on private sector players.
"Aim is to ensure that these PSUs are running professionally and there is greater value in these entities, which in future would make way for the government to dilute its stake," said a source.
The PSUs identified include Bharat Earth Movers, Container Corporation, BHEL, Certification Engineers International and others such entities.
NITI Aayog introduced disinvestment policy for the government and recommended strategic sale in several PSUs that would bring down the Centre's share in these entities to fewer than 50%.
Aayog has argued that this model will help maximise revenue, while focusing on strategic sectors such as oil or segments where the government wants to avoid a dominant role of the private sector.