The decision to launch the scheme was taken by the state cabinet at its meeting, chaired by Chief Minister Shivraj Singh Chouhan, here.
"It will provide safe and comfortable public transport facility in remote villages, especially in the tribal areas which will also ensure social and economic development of these areas," parliamentary affairs minister Dr Narottam Mishra said.
The buses plying in these areas will have a special colour to distinguish them from normal state transport vehicles, and would be equipped with GPS system.
The students must have 75 per cent attendance to get the smartphone, Mishra said.
In another decision, the cabinet granted tehsil status to Mou town in Bhind district and Ghatigaon in Gwalior district, and also sanctioned various news posts accordingly.
Other decisions included revision of licence fee of government houses, revision of mineral royalties and allotment of the remaining 4.29 hectares of government land to Sasan Power Limited.