In our fastest growing country, the demand for fuel is increasing continuously and the ever increasing dependence on crude oil imports can hamper our future growth potential to a great extent. The development of domestic fuels such as ethanol, biodiesel, compressed biogas (CBG) has the potential to transform the energy sector. During the last six years, this government has successfully invested Rs 35,000 crore in the liquidity crunch sugar industry by allowing conversion of additional sugarcane based raw materials (such as sugarcane juice, sugar, sugar syrup) for ethanol production. This has certainly helped in early settlement of dues of sugarcane farmers and improved their financial condition. For the current season, it is expected that over Rs 20,000 crore will be invested through the ethanol blending program alone, which will spur growth in the rural economy, which is the most favorable sector in the challenging Corona times.
what is the whole matter
Sugar production for the sugarcane season 2021-22 is estimated to be around 340 lakh metric tonnes, which is much higher than the initial reserves of 90 lakh metric tonnes as well as the overall domestic consumption of 260 lakh metric tonnes. Out of this, 35 lakh metric tonnes of excess quantity of sugar is proposed to be converted into ethanol.
It should not be forgotten that this is an additional amount of sugar for ethanol production, which will have to be exported to other countries at a subsidized rate or if released in the market makes sugar prices much lower than the cost of production.
This causes complete upheaval. Similarly, the rice stock with Food Corporation of India (FCI) alone (as on 05.10.2021) is 202 lakh MT, which is much higher than the buffer stock requirement of the country.
Over Rs 20,000 crore foreign exchange has been saved by mixing ethanol in petrol during the last six years. For the current year, there is likely to be a foreign exchange saving of around Rs 10,000 crore. This money reaches the pockets of common Indian people instead of purchasing crude oil.
Taking cue from the above and in line with global trends, the government has allowed to divert surplus rice reserves to the Food Corporation of India (FCI) for ethanol production.
Apart from this, the government has also allowed conversion of coarse grains like maize for ethanol production. Despite distributing free rice and other food grains during COVID-19, the Food Corporation of India still has huge stock of rice. In addition, an increased amount of fresh rice stocks will start coming in, as the agricultural season has been great.
Higher conversion of maize to ethanol will also enable higher DDGS (cattle feed) production across the country, which will again help the rural economy. In view of the additional demand generated by converting food grains into fuel, farmers will be encouraged to switch crops and also change their cropping patterns.
Allowing alternative use of rice and maize will not only help farmers achieve price stability for their production (in the absence of alternative use of surplus stock of food grains, prices may fall), but also new investment in distillery and allied infrastructure It can happen too.
This initiative also syncs well with the Prime Minister’s call for “Atmanirbhar Bharat” as we reduce our dependence on imported crude, consume our own produced eco-friendly fuel and enjoy remunerative prices to industry and farmers. Payment is possible.
It is reiterated that meeting the demand for food grains for feeding people and cattle will always be the first priority of the Government. These surplus stocks of sugar (35 lakh metric tonnes for 2021-22) and food grains have now found an alternative use route with more profit than loss.
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