Higher and technical education minister Rajesh Tope has urged the striking college teachers to call of their ongoing strike.
He said the state government had decided that the arrears due to the teachers - 10 months' salary - would be paid in two installments, Rs. 436 crore in June 2012, and Rs. 436 crore in April 2013.
The decision was taken in consultation with chief minister Prithviraj Chavan in a meeting late on Monday night, he said.
Hundreds of teachers under the banner of Maharashtra Federation of University and College Teachers' Organisation have been on strike since early April, and have decided to boycott the assessment of answer sheets, leaving final-year students stranded.
Tope has also written to all university chancellors on Tuesday, asking them take action against those who continue the strike. He has asked them to withdraw college affiliations, and even refuse grants, if college managements do not rein in their teachers.
The state government directives give powers to universities to initiate action or instruct colleges to issue show cause notices to the teachers as per the Maharashtra Universities Act, 1994.