Government Reduces Rice Price by 20% in 10 Days: Relief for Ethanol Producers and States

KKN Gurugram Desk | The Central Government has announced a 20% reduction in rice prices from its buffer stock, benefiting ethanol producers and state governments. The price has been revised to ₹2,250 per quintal, down from ₹2,800 per quintal set just 10 days ago. This decision is expected to significantly boost the ethanol production industry while aiding states and corporations in securing rice for public welfare schemes.

Key Highlights of the Rice Price Revision

1. Revised Price Structure

• The new price for rice under the Open Market Sale Scheme (Domestic) (OMSS-D) is now ₹2,250 per quintal.
• This reduction is targeted at grain-based ethanol producers and state entities purchasing directly from the Food Corporation of India (FCI).

2. Benefit to Ethanol Producers

• The ethanol industry, facing challenges due to high rice prices, has welcomed this relief.
• The reduction is expected to encourage more purchases, aligning with the government’s push for sustainable energy through ethanol production.

3. Impact on State Governments

• State governments and state-owned corporations can now purchase rice directly from the FCI without participating in e-auctions.
• This revision will also aid states implementing public distribution schemes like Karnataka’s Anna Bhagya Lakshmi scheme, which faced hurdles due to high rice prices earlier.

Background: State Demand for Affordable Rice

In 2023, Karnataka requested additional rice for its Anna Bhagya Lakshmi scheme, offering to pay ₹34 per kg. However, the Center declined the request. It wasn’t until August 2024, after Tamil Nadu and other states joined the demand, that the government agreed to supply extra rice at ₹28 per kg.

Reason for Price Reduction

While the exact discussions within government circles remain undisclosed, reports suggest that the ethanol industry was unwilling to purchase rice at higher prices. This resistance likely prompted the government to revise the rates.

Union Minister’s Statement

Union Minister for Consumer Affairs, Food and Public Distribution, Pralhad Joshi, announced the policy revision, emphasizing its dual purpose:

1. Ensuring food security for public welfare.
2. Supporting sustainable energy initiatives through ethanol production.

He stated on X (formerly Twitter):

“The revised OMSS-D policy reinforces our commitment to food security and sustainable energy for a stronger, greener future. Empowering states and communities through progressive policies!”

This price revision is a strategic move that addresses the dual challenges of rising food costs and the growing demand for renewable energy. By reducing rice prices, the government aims to support the ethanol industry while enabling states to implement welfare schemes more effectively.