The decision, taken at a meeting of the state cabinet, said no fee would be taken from the SC/ST and girl students at the time of admission in government universities and colleges in Bihar.
The government would reimburse the financial loss to such universities/colleges after gathering the actual information about it.
Cabinet Secretariat Department's Principal Secretary B Pradhan said "The decision will come into effect immediately after its notification tomorrow. The move will cost the state exchequer Rs 29 crore annually."
"According to latest government data, there were 4.05 lakh SC, ST and girl students studying undergraduate courses in the state, but the figure declines sharply to just 10,870 students belonging to these categories at the PG level," Pradhan said.
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The figures denote that a majority of students drop out from the educational system at the PG level and the state government took the decision to bring a positive change in this regard, he added.
The state cabinet also approved Rs 44.87 lakh from the state emergency fund for expenditure on schemes under Pradhan Mantri Gram Sadak Yojana (PMGSY).
Cabinet sources said the draft of the state budget for Financial Year 2015-16, which would be tabled during the budget session of Bihar Legislative Assembly beginning on February 20, was also approved by the ministers present at today's meeting.