India's Ethanol Blending Program Sparks Concerns Over Food Security and Economics
The Indian government's ethanol-blending program is facing scrutiny over its economic viability and potential impact on food security. Despite building a huge ethanol setup with ready loans, ethanol remains costlier than petrol. The government is diverting rice bought with taxpayers' money to ethanol distilleries at a 40% lower price, but the economics don't support this plan.
The Ministry of Petroleum and Natural Gas clarified that the program doesn't compromise India's food security, but sidestepped crucial questions about why rice is being given to distillers at a subsidized rate. This has sparked concerns among experts, who argue that diverting food items for ethanol production is a big sacrifice in a country where 80 crore people depend on free rations.
India's Chief Economic Advisor V Anantha Nageswaran cautioned against rushing towards higher ethanol blends, saying it's difficult to undo the changes in agriculture patterns and distillery capacity. The government has mandated the sale of E20 petrol, but experts argue that it should have started with E10 for older vehicles.
India's ethanol production capacity expanded from 421 crore litres in 2014 to nearly 2,000 crore litres by 2026, resulting in a notional surplus capacity of 700 crore litres. This has led to concerns about the sustainability of the program, as the input price of feedstock, including rice and corn, needs to be factored in.