The decision was taken by the state finance ministry late Thursday.
"The movie is inspiring for everyone. It is about one of our greatest athletes and how he conquered odds. We want people, especially youngsters to see it, " a senior official said.
Directed by Rakeysh Mehra, 'Bhag Milkha Bhag' stars Farhan Akhtar, who plays Milkha Singh and Sonam Kapoor.