NEW DELHI: The Cabinet Committee on Economic Affairs ( CCEA ) approved interest-free loan for the ailing sugar industry to pay off cane arrears.Food minister KV Thomas said: “A loan amount of around Rs 6,000-7,000 crore would be extended to the sugar industry.”The interest amount would be paid by the Centre and through the Sugar Development Fund.This bailout package has been announced in the wake of mounting cane arrears.Due to high state-advised cane prices and falling sugar prices , mills are unable to pay the cane farmers.The informal group of ministers, headed by agriculture minister Sharad Pawar, had suggested in their proposal that the loan should strictly be used to pay cane farmers.Earlier this week, Pawar said: “this proposal will go in two phases -- one this week and the final next week.”Not divulging the details, he had said that the restructuring of loan was subject to clearance from RBI, which could be taken this week.Hailing the decision, the sugar industry hoped clearing the past cane arrears through this loan. “It’s a wonderful gesture by the Union government for farmers and the industry at the same time. The loans will ensure timely payment to farmers to that extent at least, including the clearance of past cane arrears of .`3,000 crore,” said Abinash Verma, director general, Indian Sugar Mills Association (ISMA).He also said the loan would help the industry reduce the interest burden by around Rs500 crore annually in the next five years.Prime minister Manmohan Singh had appointed an informal group of ministers in November this year to look in to the issues of sugarcane farmers and sugar industry.Finance minister P Chidambaram, civil aviation minister Ajit Singh, petroleum minister Veerappa Moily and food minister KV Thomas are a part of the PM-appointed panel.Other key measures, which have been proposed by the PMappointed committee of ministers, are incentives to produce 4 million tonne of raw sugar and setting up of buffer stock, besides doubling ethanol blending in petrol to 10 per cent from the current 5 per cent.