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Economic Survey Warns Ethanol Incentives Are Distorting Crops, Seeks Recalibration

The Survey urges periodic recalibration to balance energy gains with food security.

Overview

  • As of August 2025, ethanol blending saved more than ₹1.44 lakh crore in foreign exchange and substituted about 245 lakh tonnes of crude oil.
  • The administered price of maize-based ethanol rose at a 11.7% CAGR between FY22 and FY25, creating a stronger price signal than for rice or molasses feedstocks.
  • Maize yields climbed from roughly 2.56 to 3.78 tonnes per hectare as area and output grew at 6.68% and 8.77% CAGRs, while pulses declined and oilseeds grew modestly.
  • Cropping shifts are most evident in Maharashtra and Karnataka, and the expected reduction in paddy acreage has not materialised.
  • The Survey recommends a comprehensive roadmap to raise pulses and oilseed productivity, avoid feedstock-specific distortions, and plan ethanol-crop expansion to match regional resources.