India's Ethanol Blended Petrol (EBP) program is facing criticism over the diversion of government-procured rice to distillers at subsidized rates. While the government maintains the initiative aims to reduce petroleum imports and enhance energy security, critics argue that using foodgrains for fuel compromises national food security. Data indicates that the government sells rice to ethanol producers at approximately 40% below the procurement cost, raising concerns about the economic viability of the program.
Chief Economic Advisor V. Anantha Nageswaran has cautioned against rushing toward higher ethanol blends, such as E25, before thoroughly assessing the food-versus-fuel trade-off. Currently, India has achieved an ethanol blending rate of 19.24%, supported by a significant expansion in distillery capacity. However, experts note that the cost of producing ethanol from grain and sugarcane often exceeds the refinery gate price of petrol, making the blending process expensive for oil marketing companies.
Agriculture experts emphasize that diverting foodgrains, including broken rice, for industrial fuel production ignores the potential for human consumption and humanitarian aid. With the government mandating that a portion of feedstock come from surplus Food Corporation of India stocks, questions persist regarding the long-term sustainability of the policy. Critics argue that the current economic model relies on heavy subsidies, ultimately placing the financial burden on taxpayers rather than providing clear benefits.
