jre_home environment variable is not defined correctly while starting tomcat

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When I am trying to run tomcat using startup.bat I get the following error,

The JRE_HOME environment variable is not defined correctly
This environment variable is needed to run this program

I have even tried setting JRE_HOME manually to system variable list, but this issue remains.

My JRE_HOME C:\Program Files\Java\jre1.8.0_121;

What can I do to solve it?

I am using Windows 8

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