The proposal to amend the Act was cleared by the state cabinet in its meeting chaired by Chief Minister Vasundhra Raje.
Rajasthan is the first state in the country to take this initiative to improve the quality of education.
The amendment will be tabled in Assembly in the monsoon session beginning September 16, Parliamentary Affairs Minister Rajendra Rathore told reporters after the meeting.
After the amendments are passed, they will be forwarded to the President for his accord.
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After these amendments, schools will evaluate students on basis of their performance. In case performance is not good students will be failed.
"The government has decided to bring the amendments for the evaluation of students on their performance. It will certainly improve the education standards in Rajasthan," the Minister said.
The cabinet also approved a bill to repeal 247 Acts (60 principal and 187 amended Acts) which have no use, IT policy in the state to promote IT and IT enabled services, increase in penalty amount for person caught under influence of alcohol at public place and review of restoring Urdu teachers' posts which have been abolished by the government.
The cabinet cleared the proposal to increase penalty amount from present amount of Rs 50 to Rs 500 for a person caught under influence of alcohol for the first time, Rs 5,000 on second time and and Rs 10,000 for the third time, he said.