NEW DELHI: The government on Wednesday approved a Rs 6,000crore interest-free loan to sugar mills to help them partly clear cane price arrears to farmers. These arrears have shot up to about Rs 21,000-crore.

“Mills have been unable to make payment to farmers because of high production and lower domestic prices. Cane arrears have reached Rs 21,000 crore,” Union minister Nitin Gadkari told reporters after the meet. “The government has sanctioned interest-free loan of Rs 6,000 crore for farmers. Sugar mills will prepare the list of farmers. And on the basis of that the amount will be directly transferred by banks into the Jan Dhan accounts of farmers,” he said.

The decision was taken in a meeting of the Cabinet Committee on Economic Affairs (CCEA) held here on Wednesday.

“The CCEA has provided a one-year moratorium on this loan, and will bear the interest subvention cost to the extent of Rs 600-crore for the said period,” an official statement said. CCEA also decided that the loans would be provided to those units which clear at least 50% of their outstanding arrears before June 30, 2015. “This decision is not to support the industry, but keep interests of farmers in mind,” Gadkari said.