EconomyAgriculture
News 5 of 26

FCI Diverts 5 MMT Rice to Ethanol at ₹23/kg, Renews Food-vs-Fuel Debate Under MSP Distortions

Target:UPSC GS-IIIMPSCSSC GATeachingPrelims HighMains HighStatic GK Link
05 Jul 2026
~2 min
Source: Indian Express
Key Data:154 MMT rice production24.5 MMT rice exports40% global trade share800 million NFSA beneficiaries5x buffer norm stocks₹10,712 crore carrying cost
Bodies:FCIICRIER
Practice MCQs from today's news ▸
What This Article Covers

1.India produced 154 MMT rice in 2025-26, becoming world's largest producer; exports 24.5 MMT (40% of global trade).

2.FCI rice stocks at 5x buffer norm; carrying cost ₹10,712 crore in FY25; 5 MMT diverted to ethanol at half economic cost.

3.Three distorted policies: open-ended MSP, free power, subsidized urea – cause overproduction, environmental damage, and renew food-vs-fuel debate.

The Big Picture
Prelims · HighMains · High

India's rice-to-ethanol policy uses subsidized rice (₹23/kg vs economic cost ₹44/kg) to reduce FCI's overflowing stocks, but deepens economic and environmental stress through groundwater depletion, GHG emissions, and fertilizer overuse. The article critiques MSP bonuses, free power, and urea subsidies, calling for structural reforms.

Exam Lens

Quick Exam Facts From News

Rice Production (2025-26)154 MMT
Rice Exports (2025)24.5 MMT
Global Rice Trade Share40%
NFSA Beneficiaries800 million
FCI Stock vs Buffer5x buffer norm
Carrying Cost (FY25)₹10,712 crore
Rice Diverted to Ethanol (FY26)~5 MMT
Economic Cost to FCI (FY27)₹44/kg
Price to Ethanol Plants~₹23/kg
MSP for Paddy (2025-26)₹2,369/quintal
Punjab Combined Subsidy/ha₹38,973/ha
Urea Retail Price (45kg bag)₹242 (frozen)
Water Required per kg Rice~4,000 litres
Methane Potency vs CO225 times
Nitrous Oxide Potency vs CO2273 times

1-Minute Revision

  • ›Rice Production (2025-26): 154 MMT
  • ›Rice Exports (2025): 24.5 MMT
  • ›Target this Data: 154 MMT rice production (2025-26), 5 MMT diverted to ethanol, ₹44/kg economic cost vs ₹23/kg to ethanol plants.
  • ›Target this Nodal Body: Food Corporation of India (FCI) – under Ministry of Consumer Affairs, Food and Public Distribution.
  • ›Target this Legal Point: National Food Security Act (NFSA) – provides 5 kg food grains/person/month to 800 million beneficiaries.

Mastered this topic? Test your knowledge with a full MCQ quiz.

Practice exam-style questions, track your score, and strengthen your recall.

Q1Static LinkageEasy

Which government agency is responsible for holding and managing the buffer stock of rice mentioned in the article?

Q2Statement-basedHard

Consider the following statements regarding India's rice production and ethanol policy:

1. India became the world's largest rice producer in 2025-26, surpassing China.

2. FCI supplies rice to ethanol plants at its economic cost of ₹44 per kg.

3. Rice cultivation requires approximately 4,000 litres of irrigation water per kilogram.

Which of the statements given above is/are correct?

Q3Data-centricMedium

What was the carrying cost incurred by FCI on the extra buffer stock of rice in the financial year 2024-25 (FY25)?

Q4Application/ImpactMedium

According to the authors, what is the primary problem with the government's current approach of diverting rice to ethanol?

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