Priyank Kharge questions Centre’s ethanol policy: ‘Who gets subsidy, who benefits?’

BENGALURU: Karnataka minister Priyank Kharge has questioned the Centre’s policy of selling foodgrains to ethanol producers at subsidised rates after procuring paddy from farmers using taxpayers’ money and bearing the cost of storage and transportation.

In a social media post, Kharge said the “ethanol math” did not add up, questioning the economic rationale behind diverting subsidised foodgrains for ethanol production.

He pointed out that the government spends public money to procure paddy for food security and subsequently incurs additional costs through the Food Corporation of India (FCI) for storage and transportation. Despite this, the grain is reportedly supplied to ethanol manufacturers at around 40% below its acquisition cost.

Kharge questioned whether large quantities of foodgrains were being diverted to ethanol production to meet the needs of rapidly created ethanol capacity.

He also raised questions over the government’s ethanol procurement policy, pointing out that the Centre sells grain to producers at concessional rates but subsequently buys ethanol from the same industry at higher prices for blending with petrol.

“What is the real benefit to consumers?” Kharge asked, seeking clarity on whether ethanol blending has reduced petrol prices and what impact it has had on vehicle mileage and maintenance costs.

He further questioned whether the policy effectively amounts to subsidising ethanol producers at the expense of taxpayers.

This is bizarre and deeply concerning.

The government buys paddy with taxpayer money for food security, incurs procurement, storage and transport costs and then sells FCI rice to ethanol distillers at roughly 40% below its acquisition cost.

Why? Because the ethanol capacity…

— Priyank Kharge / ಪ್ರಿಯಾಂಕ್ ಖರ್ಗೆ (@PriyankKharge) August 25, 2026

Kharge urged the Centre to provide a transparent account of the economic and public-interest implications of diverting foodgrains meant for food security towards ethanol production.