Karnataka Home Minister Priyank Kharge on Tuesday, 25 August challenged the Centre's ethanol blending policy, questioning why rice procured with taxpayers' money is being sold to ethanol producers at prices reportedly 40 per cent below its acquisition cost. The statement, issued from Bengaluru, demands public accountability over what Kharge called a structurally flawed subsidy chain.

The Core Allegation

Kharge argued that the government's ethanol arithmetic is internally contradictory. The Centre procures paddy from farmers using public funds, then bears additional costs on storage and transportation through the Food Corporation of India (FCI) — only to sell the resulting rice to ethanol manufacturers at a steep discount.

'India's ethanol arithmetic simply does not add up,' Kharge said, pressing the Centre to explain who ultimately benefits from this arrangement. 'Grain is subsidised with taxpayers' money; the government bears the cost of procurement, storage and transportation; and then the same grain is sold to ethanol producers at a discounted price. So, who is actually benefiting from this entire system?' he asked.

The Double-Subsidy Question

Kharge further questioned whether the government then purchases ethanol back from the same producers — who received grain at below-cost rates — at a higher price for blending with petrol. He argued this creates a double-subsidy loop that benefits the ethanol industry at the public's expense.

'If grain is supplied at a lower price and ethanol is subsequently purchased from the same industry at a higher price, what is the actual benefit to the ordinary consumer?' he asked. His remarks also raised the question of whether ethanol blending capacity was built up rapidly, creating pressure to divert foodgrains to feed that capacity regardless of food security implications.

Impact on Consumers and Food Security

The Karnataka minister questioned whether ethanol blending has translated into lower petrol prices for consumers at the pump, and whether the policy's effects on vehicle mileage and maintenance costs have been adequately studied. He argued that foodgrains earmarked for food security are being redirected without a transparent public-interest assessment.

Notably, India's ethanol blending programme — aimed at reducing crude oil imports and cutting carbon emissions — has been a flagship energy policy of the Centre. Critics, however, have periodically raised concerns about the trade-off between fuel targets and food availability, particularly when surplus grain stocks are used as feedstock.

Kharge's Demands

Kharge demanded that the Centre place a full accounting of the economic, social, and public-interest implications of the policy before the public. He reiterated that the 'apparent contradictions' in the ethanol programme must be explained transparently. 'Who is subsidising whom? Who are the real beneficiaries of this system?' he asked, calling on the Centre to provide a clear answer.

The Centre has not yet responded publicly to Kharge's statement. With food inflation remaining a political flashpoint, the debate over grain diversion to ethanol production is likely to intensify in the coming weeks.