The approval was given by the Cabinet Committee on Economic Affairs (CCEA) at its meeting held here.
The central government had announced the Nirbhaya fund after a 23-year-old woman was brutally gang-raped in a moving bus in Delhi in December 2012. The girl, dubbed Nirbhaya, later died in a Singapore hospital. The incident sparked huge protests across the country and brought to the fore the need for safe and secure public transport.
The project will help in mapping routes of public vehicles, tracking vehicles on the route, highlighting violations through visual and text signals, and a panic button to alert police.
The project is aimed at providing safety and security to women in distress in minimum response time, Finance Minister P. Chidambaram told reporters here.
The total estimated cost of the project will be Rs.1,405 crore. It will be implemented within two years.
The emergency button in public transport vehicles will generate an alarm in the central tracking system.
Chidambaram said the finance ministry has given in-principle approval to two other proposals, which include installation of a panic alarm button in mobile handsets.