The revision comes as paddy production is estimated to reach record levels, prompting the government to ease the price to ensure surplus rice is effectively distributed.

Dhirendra Kumar

In a move to enhance food security and boost ethanol production, Union food and consumer affairs minister Pralhad Joshi announced a revision to the Open Market Sale Scheme (Domestic) Policy for 2024-25.

The updated policy, announced on 17 January, sets a reserve price of ₹2,250 per quintal for rice sold to state governments, state corporations, and community kitchens, without the need to participate in e-auctions, according to a government release.

Additionally, the reserve price of rice intended for sale to ethanol distilleries has also been fixed at ₹2,250 per quintal, aligning with the country’s national energy strategy, the release added.

The new price is a reduction from ₹2,900 per quintal earlier, set by the ministry in mid-August, after a revision from ₹3,100 per quintal that aimed to increase offtake.

The revision comes as India’s paddy production is estimated to reach record levels, prompting the government to ease the price to ensure surplus rice is effectively distributed.

India is set to achieve record foodgrain production of 332.29 million tonnes (mt) in the 2023-24 July-to-June agricultural year, according to final estimates released by the agriculture ministry. This represents an increase of 2.61 mt from the previous year’s total of 329.68 mt. The growth is attributed to favourable production in key categories such as rice, wheat, and millets.

Rice production in 2023-24 set a record at 137.83 mt, an increase of 2.07 mt (or 1.5%) from 135.76 mt in the previous year. Wheat production also reached a new high of 113.29 mt, 2.74 mt higher (or 2.5%) than the 110.55 mt produced in 2022-23, the data showed.

“These decisions reflect the government’s commitment to assisting states in fulfilling their obligations under various welfare schemes, enhancing food security, and supporting ethanol production as part of the national energy strategy,” the ministry said.

For wheat, the ministry has set a reserve price of ₹2,325 per quintal for fair average quality (FAQ) wheat and ₹2,300 per quintal for under relaxed specifications (URS) wheat. These rates will remain effective for all wheat crops, including the rabi marketing season (RMS) 2024-25, until 31 March this year.

Policy objectives

The government aims to use the updated prices to ensure a steady supply of rice to key sectors, support food security, and bolster ethanol production for blending with petrol. The policy is also designed to help states fulfill their obligations under various welfare schemes, contributing to the larger national goals of energy self-sufficiency and sustainable development.

In the context of India’s rising energy demand, driven by factors such as a growing economy, expanding population, increasing urbanisation, and changing lifestyles, ethanol plays a vital role. As of March 2024, about 98% of the fuel used in the road transportation sector is sourced from fossil fuels, while only 2% is provided by biofuels like ethanol.

Published Date: January 18, 2025