The Union government defended E20 ethanol-blended fuel and said its economics depend on the level of international crude oil prices. The explanation matters for UPSC because it links energy security, farm income support, and the pricing of transport fuel.
The government’s main claim is that ethanol is procured at remunerative prices to compensate Indian farmers, but the resulting fuel may not always be cheaper than petrol when crude prices are low.
What the government said
According to the government’s explanation, maize-based ethanol is bought at about ₹71.86 per litre before GST and logistics/depot costs. It said that when international crude is around $70 per barrel, producing E20 can be costlier than producing pure petrol.
The government also said that ethanol becomes relatively cheaper only when crude rises to roughly $120–130 per barrel. On this basis, the price advantage of blending is not fixed and depends on the global oil cycle.
Why the policy was defended
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