In certain sections of the media, there were certain reports linking ambitious Ethanol Plan with Food Security fears in the country.
It is categorically stated that these reports are unfounded, malicious and bereft of facts.
It is very important to understand that for a young country like India, while meeting food requirements are of paramount importance, fulfilling the energy needs through all means is also significant. Thus, the changed perspective should be “Food with Fuel” and not “Food versus Fuel”.
Fuel demand is ever rising in the fastest growing country and ever-increasing dependence on crude oil imports can grossly hamper our future growth potential. Developing in-house fuels like ethanol, biodiesel, compressed biogas (CBG) has the potential to turn around the energy sector. During the last six years, this Government has successfully injected Rs.35,000/- crores in the liquidity starved sugar industry by allowing conversion of surplus sugarcane based raw materials (viz. sugarcane juice, sugar, sugar syrup) for ethanol production. This has definitely helped in early settlement of cane farmers’ dues, thereby improving their financial position. For the ongoing season, it is expected that more than Rs.20,000/- crores will be injected through the ethanol blending programme alone, which will fuel growth in the rural economy, the most resilient sector in challenging COVID times.
The sugar production for ensuing sugar season 2021-22 is projected to be about 340 Lakh MT, over and above the opening stock of 90 Lakh MT which is cumulatively much above the domestic consumption of 260 Lakh MT. Out of this, surplus sugar quantity of 35 Lakh MT is proposed to be diverted to ethanol. Not to forget, these are SURPLUS quantities of sugar to be diverted for ethanol production, else would have to be exported at subsidized rate to other countries or if released in the market would nosedive sugar prices much below the production cost leading to utter chaos. Similarly, the stocks of rice with Food Corporation of India (FCI) alone (as on 05.10.2021) are 202 lakh MT, much higher than the buffer stock requirement of the country.
The foreign exchange impact by blending ethanol in petrol has been to the tune of over Rs.20,000/- crores during last six years. For the ongoing year, there will be an additional positive impact of around Rs.10,000/- crores. This money goes into the pockets of common Indian rather than crude oil purchases.
Taking cue from above and as per global practices, the Government has allowed conversion of surplus stocks of rice with FCI for ethanol production. Further, the Government has also allowed conversion of coarse grains like maize for ethanol production. Inspite of distributing free rice and other grains during COVID-19, FCI still holds huge stocks of rice. Moreover, enhanced quantity of fresh rice stocks will start coming in as the agriculture season has been very good.
Higher conversion of maize to ethanol will also enable higher DDGS (cattle feed) production across the country which will again aid rural economy. This will also encourage farmers to switch crops and change their crop pattern in view of additional demand generated by diversion of foodgrains to fuel.
Allowing alternative use to rice and maize will not only help aiding price stability (in absence of alternative use of surplus stocks of food grains, prices may collapse) to the farmers for their output, but also enable new investment in distilleries and allied infrastructure. This initiative also goes well with Hon’ble Prime Ministers call on “Atmanirbhar Bharat” (Self Reliant India) as we reduce our dependence on imported crude oil, consume our own produced environment friendly fuel and pay remunerative prices to the Industry and Farmers.
It is reiterated that meeting food grains demand for human and cattle consumption will always remain the first priority of the Government. These surplus stocks of sugar (35 lakh MT for 2021-22) and food grains have now found an alternative use with benefits overweighing disadvantages.
