The decision was taken at the cabinet meeting chaired by Chief Minister Prithviraj Chavan at Vidhan Bhavan.
According to the decision, villages which protect atleast 50 hectares of forest land cover, safeguard trees and stop illegal felling will benefit from the scheme.
They will get LPG connections at 75 per cent concession rate, grants for biogas connection, 50 per cent concession for lactating cattle, Rs 5 per tree every month to encourage conservation of trees and sowed crop.
Officials said there are 15,500 villages along a forest area of 61,939 sq ft and majority of locals are tribals who are dependent on it for wood.
"Wood cutting adversely affects natural growth of trees and the thickness of forest reduces. Similarly, smoke due to burning of wood for cooking purpose is a health hazard to women," they said, adding that the government has decided to set aside Rs 100 crores for tree plantation.
About 12,600 joint forest management committees have been set up to involve villagers in conservation efforts.