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UP Elections: Government Approves Ethanol Price Hike To Benefit Sugarcane Farmers

With the Uttar Pradesh assembly elections just months away, the national government approved an increase in the price of ethanol by 80 paise per litre on Wednesday.

Chintu Das
Sugarcane Farmers
Sugarcane Farmers

As part of its goal to attain 20% doping by 2025, the government increased the price of ethanol derived from sugarcane for blending in petrol by up to Rs 1.47 per litre for the marketing year 2021-22, which begins in December. 

Increased ethanol blends in petrol would help India reduce its oil import cost while also benefiting sugar cane producers and sugar mills. 

Sugarcane is one of the most important crops in Uttar Pradesh, which has a large cane-growing region in the western part of the state. The action is expected to send a favourable message to the region's cane farmers. 

Prime Minister Narendra Modi's Cabinet Committee on Economic Affairs (CCEA) has approved a higher price for ethanol made from various sugarcane-based raw materials under the Ethanol Blended Petrol (EBP) Program for the Ethanol Supply Year (ESY) 2021-22, which begins next month. 

Anurag Thakur, Minister of Information and Broadcasting, stated the price of ethanol derived from sugarcane juice has been raised to Rs 63.45 per litre from Rs 62.65 per litre for the supply year commencing December 2021. 

The cost for ethanol produced from C-heavy molasses has been raised to Rs 46.66 per litre, up from Rs 45.69 per litre before, while the rate for ethanol produced from B-heavy molasses has been raised to Rs 59.08 per litre, up from Rs 57.61 per litre previously. 

The GST and shipping charges on ethanol obtained for doping in petrol would be borne by oil marketing organisations Indian Oil Corp (IOC), Bharat Petroleum Corp Ltd (BPCL), and Hindustan Petroleum Corp Ltd (HPCL), who procure ethanol from sugar mills and distilleries. 

According to Thakurethanol-to-petroleum blending reached 8% in the 2020-21 marketing year (December-November) and is likely to hit 10% following year. 

By 2025, India intends to expand its blending to 20%. 

According to an official announcement, the CCEA clearance would not only assist the government maintain its goal of providing price stability and remunerative pricing for ethanol providers, but it will also contribute in lowering cane farmers' outstanding arrears and reliance on crude oil imports. 

In October 2020, the Centre increased the price of ethanol extracted from sugarcane for blending in petrol by up to 3.34 percent to further promote the programme, which has benefited farmers and helped reduce the country's oil import cost. 

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