Insular incentive: On ethanol-blended fuel and the Indian consumer
The Indian government’s policy to continue producing E20 petrol at a cost higher than that of pure petrol when oil prices dip under $70 a barrel to “compensate farmers adequately” is a deceptively well-formulated proposition. Most feedstock for the fuel-blending programme is from sugarcane, one of India’s most water- and fertilizer-intensive crops, mainly grown in water-stressed Maharashtra and Karnataka. Whether the policy’s net economic benefit remains positive will depend on the gains from lower crude imports, environmental improvements, and higher rural incomes outweighing these additional costs.
- ▪The Indian government’s policy to continue producing E20 petrol at a cost higher than that of pure petrol when oil prices dip under $70 a barrel to “compensate farmers adequately” is a deceptively well-formulated proposition.
- ▪Most feedstock for the fuel-blending programme is from sugarcane, one of India’s most water- and fertilizer-intensive crops, mainly grown in water-stressed Maharashtra and Karnataka.
- ▪Whether the policy’s net economic benefit remains positive will depend on the gains from lower crude imports, environmental improvements, and higher rural incomes outweighing these additional costs.
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The Indian government’s policy to continue producing E20 petrol at a cost higher than that of pure petrol when oil prices dip under $70 a barrel to “compensate farmers adequately” is a deceptively well-formulated proposition. Most feedstock for the fuel-blending programme is from sugarcane, one of India’s most water- and fertilizer-intensive crops, mainly grown in water-stressed Maharashtra and Karnataka. Whether the policy’s net economic benefit remains positive will depend on the gains from lower crude imports, environmental improvements, and higher rural incomes outweighing these additional costs. Efficiency also remains a concern.
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Excerpt limited to ~120 words for fair-use compliance. The full article is at The Hindu.
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