Cabinet restores MPLADS, okays ethanol price increase

In April last year, the Cabinet suspended MPLADS for fiscal 2021 and 2022 and instead placed the funds with the finance ministry to deal with the coronavirus pandemic that emerged in Wuhan, China, and wreaked the global economy including that of India’s. The funds were used to improv healthcare infrastructure, providing free ration under PM Garib Kalyan Yojana, and free vaccination.

“The Ministry will release MPLADS fund at the rate of ₹2 crore per Member of Parliament for the remaining period of FY 2021-22 in one installment and at the rate of ₹5.00 crore per annum per Member of Parliament during FY 2022-23 to FY 2025-26 in two installments of ₹2.5 crore each,” the government said in a statement.

In other developments, the Cabinet Committee of Economic Affairs (CCEA) approved mechanism for procurement of ethanol by state owned oil marketing companies. Also, the CCEA approved a committed price support of ₹17, 408.85 crore to the Cotton Commission of India (CCI) for the cotton seasons from 2014-15 to 2020-21 (up to 30.09.2021) and made it compulsory for 100% food grains and 20% of sugar to be packed in jute bags.

This comes in the run up to assembly elections in Uttar Pradesh and in the backdrop of ongoing farmer protests against the three central farm laws, with the widespread protests in agrarian states such as Haryana and Punjab.

“The Cabinet Committee on Economic Affairs chaired by Prime Minister, Shri Narendra Modi, has given its approval for fixing higher ethanol price derived from different sugarcane based raw materials under the EBP (ethanol blending with petrol) Programme for the forthcoming sugar season 2020-21 during ESY 2020-21 from 1st December 2020 to 30th November 2021,” the government said in a statement.

In a push to India’s energy security efforts, the country’s ethanol distillation capacity is expected to double by 2025. According to the government, India will achieve 20% target for EBP to 2025. The government has been pushing for ethanol production with surplus sugar production depressing sugar prices and consequently increasing the dues of sugarcane farmers.

While the CCEA approved hike in prices pf ethanol derived from from C heavy molasses to Rs. 46.66 per litre from ₹45.69, the price of ethanol from B heavy molasses has been raised to ₹59.08 per litre from ₹57.61. Also, price of ethanol derived from sugarcane juice, sugar/sugar syrup will be hiked from ₹62.65 per litre to ₹63.45.

“Government has decided that Oil PSEs should be given the freedom to decide the pricing for 2G ethanol as this would help in setting up advanced biofuel refineries in the country. It is important to note that grain-based ethanol prices are currently being decided by Oil Marketing Companies (OMCs) only,” the government said in a statement.

There are around 5 crore sugarcane farmers and their families, and 5 lakh workers associated with sugar mills and other ancillary activities. India has an ethanol production capacity of 684 crore litre. For the targeted 20% blending of ethanol with petrol by 2030, the country will need a 1,000-crore litre capacity.

“The approval will not only facilitate the continued policy of the Government in providing price stability and remunerative prices for ethanol suppliers, but will also help in reducing the pending arrears of Cane farmers, dependency on crude oil imports and will also help in savings in foreign exchange and bring benefits to the environment,” the statement added.

The National Biofuel Policy 2018 had earlier envisaged an indicative target of 20% blending of ethanol in petrol and 5% blending of biodiesel in diesel by 2030. The blending percentage of ethanol with petrol has also gone up from 1.53% in 2013-14 to 8.5% in 2020-21.

“Consistent surplus of sugar production is depressing sugar price. Consequently, sugarcane farmer’s dues have increased due to lower capability of sugar industry to pay the farmers. Government has taken many decisions for reduction of cane farmer’s dues. With a view to limit sugar production in the Country and to increase domestic production of ethanol, Government has taken multiple steps including, allowing diversion of B heavy molasses, sugarcane juice, sugar and sugar syrup for ethanol production. Now, as the Fair and Remunerative Price (FRP) of sugarcane and ex-mill price of sugar have undergone changes, there is a need to revise the ex-mill price of ethanol derived from different sugarcane based raw materials,” the statement added.

The government has been trying to improve farmers’ income, with the CCEA recently approving increase in minimum support prices (MSPs) for kharif crops for marketing season 2021-22 to ensure remunerative prices to farmers.

“Cabinet approves incurring expenditure for reimbursing the losses under MSP operations for cotton during the cotton season (October to September) 2014-15 to 2020-21,” the government said in another statement and added, “In order to safeguard the interests of the cotton farmers, it is expedient to conduct price support operations in cotton years 2014-15 to 2020-21 as cotton prices touched the MSP prices. Its implementation enhances the inclusiveness of the cotton farmers in the economic activity of the country. Price support operations help stabilize the cotton prices and alleviate farmer’s distress.”

According to the government, cotton is one of major Indian cash crops and supports around 58 lakh cotton farmers and atleast 400 lakh people engaged in cotton processing and trade.

“During cotton season 202-21, area under cotton cultivation was 133 lakh hectares with estimated production of 360 lakh bales, which account for around 25% of total global cotton production,” the statement said and added, “During global pandemic in the last two cotton seasons (2019-20 and 2020-21), CCI procured around 1/3rd of the cotton production in the country i.e. about 200 lakh bales and disbursed more than Rs.55,000/- crore directly in the bank accounts of around 40 lakh farmers.

With the union government buying jute sacking bags worth around ₹8,000 crore every year for packing of food grains, the CCEA also approved reservation norms for jute packaging materials for Jute Year 2021-22

“Reservation for packaging in jute packaging material consumed around 66.57% of the raw jute produced in the country (in 2020-21). By bringing into effect the provision of JPM Act, the Government will provide relief to 0.37 million workers employed in jute mills and ancillary units as well as support the livelihood of around 4.0 Million farm families. Besides, it will help protect environment because jute is natural, bio- degradable, renewable and reusable fibre and hence fulfills all sustainability parameters,” the government said in another statement.