The state cabinet also decided to waive Rs 268 crore towards interest on crop loans and electricity bills of Rs 200 crore of farmers.
The cabinet, at a meeting chaired by the Chief Minister Prithviraj Chavan, decided to write to the Election Commission of India seeking its permission to make the announcement in this regard in view of the model of code of conduct for Lok Sabha polls.
Sources said the compensation will be Rs 25,000 per hectare.
A pro-farmer group Vidarbha Jan Andolan Samiti claims that 32 farmers have killed themselves in the past three weeks, including 45-year-old Uddhav Nanabhau Tandale, who hanged himself in his home in Maharashtra's Beed district this morning.
The farmer suicides have taken on political overtones ahead of next month's national election. On Thursday, it will be the theme of Narendra Modi's 'Chai pe charcha' or discussion over tea campaign in the Vidarbha region, which has often been described as "suicide country."
Mr Modi, who is running for prime minister, will address a rally in Wardha before holding a "chai pe charcha" discussion at a village of debt-ridden farmers in the Yavatmal district. The BJP says Mr Modi will interact with farmers in 33 districts across India as part of the campaign.