Suryaa Business Desk: Surya Economy & Agriculture Bureau, New Delhi: Aiming to reduce the burden of crude oil imports and control carbon emissions, the central government has proposed 20 percent ethanol... Surya Economy & Agriculture Bureau, New Delhi: With an aim to reduce the burden of crude oil imports and control carbon emissions, the central government is expediting the distribution of 'E20' fuel with 20 percent ethanol. However, even though the production cost of ethanol is lower than the production cost of regular petrol, E20 fuel is sold to consumers at the price of conventional petrol. On the one hand, motorists are not getting any relief in terms of fuel prices, on the other hand, there are concerns that this policy is putting severe pressure on the country's food economy and causing the prices of essentials to rise. Diversion of food grains – impact on prices: Sugarcane juice and molasses along with major food grains such as rice and maize are used on a large scale for ethanol production.
Pressure on sugar and rice reserves: As molasses and sugarcane juice from the sugar industry are diverted directly to ethanol, there is a threat of reduction in domestic sugar production and rise in prices in the market. The government also has to impose restrictions on ethanol quotas to prevent sugar prices from rising. Poultry and fodder crisis: As the supply of food grains to ethanol distilleries increases, there is a shortage of corn and other raw materials required for poultry and dairy industries. Prices of milk, eggs and chicken are gradually increasing due to increase in animal feed prices. 'Food vs Fuel' Controversy: The issue of 'Food vs Fuel', which is the subject of global debate, is heating up in India as well.
Economists warn that diverting major agricultural resources to fuel distilleries while providing nutritional security to the population will increase food inflation in the long run. Benefit not available to consumers: While the price of ethanol is only around Rs.55 to Rs.65 per litre, petrol is being sold at normal price in banks despite 20 per cent blend. Although this is generating profits for the oil marketing organizations (OMCs), there is criticism that the common man is not getting the benefit and moreover the mileage of the vehicles is getting reduced slightly. Experts suggest giving priority to agricultural waste based (2G Ethanol) fuel production without compromising food security and price stability.