New Delhi: Prime Minister Narendra Modi’s government on Thursday rejected the reports that ethanol blending in petrol will impact the country’s food security. Calling the reports malicious and devoid of any facts, the government said, meeting the food grain requirement for human and cattle consumption will always remain a top priority.
In a statement, the ministry of petroleum and natural gas, said alternative use of rice and maize helps in price stabilisation for the farmers which will also enable new investment in the agriculture sector.
The ministry said ethanol blending in fuel also helps in reducing the country’s dependence on imported crude oil and ensures remunerative prices to the industry and farmers.
“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’,” it said.
The government said there was increasing demand for fuel in a fast growing country like India and ever increasing dependence on crude oil imports could hamper the country’s growth potential.
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Developing in-house fuels like ethanol, biodiesel, compressed biogas (CBG) has the potential to turn around the energy sector, it said.
Crude oil import burden
India imports nearly 80% of its crude oil and natural gas oil requirement from abroad which leads to heavy outgo of foreign exchange.
On average, India spent over $100 billion per year on the import of crude and gas in the last five years.
According to the latest official data, the country has already spent nearly $50 billion on the import of crude oil, gas and other petroleum products in the first five months of the current financial year (April-August 2021).
Liquidity support for sugar industry
The ministry said Rs 35,000 crore was injected in the liquidity starved sugar industry during the last six years of the Modi government by permitting conversion of surplus sugarcane-based raw materials such as sugarcane juice, sugar and sugar syrup for ethanol production.
“This has definitely helped in early settlement of cane farmers’ dues, thereby improving their financial position,” it said
The government said more than Rs 20,000 crore will be injected into the sugar industry during the ongoing season only due to an ethanol blending programme that will fuel the rural economy.
No shortage of sugar
The government also rejected the reports that its policy of encouraging ethanol blending will lead to a shortage of sugar. It said the sugar production in the ongoing season is expected to be about 340 lakh metric tonnes and the country also has an opening stock of 90 lakh metric tonne sugar.
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It said the cumulative stock of 430 lakh metric tonne sugar is much more than the domestic consumption of sugar which has been estimated at 260 lakh tonne, leaving a surplus of 170 lakh tonne sugar.
“Out of this, surplus sugar quantity of 35 Lakh metric tonne is proposed to be diverted to ethanol,” it said.
Officials said if the surplus sugar is not diverted to ethanol production then it would have to be exported to other countries at a subsidized rate. And if it is released in the domestic market then it would cause a substantial reduction in sugar prices much below the cost of production that would lead to a chaotic situation.
They said the stocks of rice with the Food Corporation of India on October 5 was 202 lakh metric tonnes which was much higher than the buffer stock requirement of the country.
According to an official estimate, blending ethanol in petrol saved foreign currency worth Rs 20,000 crore in the last six years and it will save an additional Rs 10,000 crore on import bills in the ongoing season.
“This money goes into the pockets of common Indians rather than crude oil purchases,” it said.
Coarse grains to ethanol conversion
Defending the government’s decision to allow conversion of coarse grains such as maize and surplus stock of rice available with the FCI into ethanol, the ministry said it was based on global practices.
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“In spite of distributing free rice and other grains during COVID-19, FCI still holds huge stocks of rice. Moreover, an enhanced quantity of fresh rice stocks will start coming in as the agriculture season has been very good,” it said.
The ministry said increasing conversion of maize to ethanol will also enable higher cattle feed production in the country which will encourage farmers to switch crops and change their farming patterns in view of additional demand generated by diversion of food grains to fuel.
