Rundeck setsup all the options passed to a job as environment variable like $RD_OPTION_* but it is not setting up those variables when a job is executed in remote n
As Yang said it was due to ssh configurations. Likewise AcceptEnv variable in sshd_config there is SendEnv variable in ssh_config so I have to specify RD_* in SendEnv like this SendEnv RD_* in localhost ssh_config which will instruct ssh to send those environment variables to server. I found out the following things that needs to be done when working with environment variables
SendEnv needs to be setup in ssh_config file in localhost for sending the environment variables.AcceptEnv needs to be setup in sshd_config file in remote node in order to accept environment variables passed to the server.