Government agencies have widened their investigation into an alleged Rs 1,160 crore rice diversion case, bringing 56 private rice mills and 22 ethanol plants across 17 districts under scrutiny. The probe is focused on determining whether subsidised government rice allocated for ethanol production was diverted through private mills instead of being used for its intended purpose.
Investigation expands after truck found at private rice mill
The investigation began after a truck transporting government rice from a Food Corporation of India (FCI) warehouse to an ethanol plant was allegedly found inside a private rice mill. What initially appeared to be an isolated incident has now expanded into a multi-district probe involving 17 seized trucks, over 50 witness statements and multiple accused.
Authorities are trying to establish how much of the nearly 5 lakh metric tonnes of government rice supplied to ethanol plants was actually converted into ethanol and whether a portion of it was diverted before returning to government warehouses.
Alleged circular trade under investigation
Investigators suspect that subsidised rice supplied to ethanol plants at around Rs 2,320 per quintal may have been sold to private rice mill operators at higher prices instead of being processed into ethanol.
According to the investigation, the rice was allegedly repacked by private mills and deposited back into government warehouses as custom-milled rice. Officials are also examining whether the original paddy supplied for milling was sold separately in the open market or transported to other states, potentially allowing multiple profits from the same stock.
Authorities believe the alleged arrangement, if established, could have enabled financial gains at several stages while avoiding actual ethanol production.
Officials examining monitoring failures
The investigation is also looking into whether lapses in monitoring or possible collusion allowed government rice to re-enter official warehouses without proper verification.
Officials are checking whether rice previously released under the ethanol scheme was accepted again as newly milled stock through the custom milling system.
Police register FIR, arrest four accused
Balaghat Superintendent of Police Aditya Mishra said the case began after authorities received information about three trucks carrying government rice from FCI warehouses to the AVJ Agrico ethanol plant. During a joint inspection by Revenue, Food and Police officials, one truck was allegedly found inside Sancheti Rice Mill, leading to the registration of an FIR for cheating.
A Special Investigation Team (SIT) comprising 20 to 25 members was subsequently formed.
According to the police, investigators have so far:
- Arrested four people
- Identified more than 13 accused
- Recorded statements of over 50 witnesses
- Issued notices to 56 rice mills
- Seized 17 trucks
- Obtained non-bailable warrants against two individuals
Police said the investigation remains ongoing and further action will be taken based on new evidence.
Production records and transport data under verification
Investigators are comparing FCI dispatch records with ethanol production data, transport logs, warehouse receipts and custom milling records.
Authorities are also examining production capacity, electricity consumption, machinery usage and raw material records at ethanol plants to verify whether the quantity of rice supplied matches actual ethanol output.
Similar verification is underway at rice mills to determine whether their claimed milling operations correspond with electricity consumption, labour deployment and machinery records.
Use of fortified rice raises additional questions
The case has drawn additional attention because the grain under scrutiny was fortified rice, which is enriched with iron, folic acid and Vitamin B12 to help address anaemia and malnutrition among children, pregnant women and adolescent girls.
Investigators are examining why fortified rice was supplied for ethanol production when distilleries generally use broken rice as feedstock. They are also looking into whether FCI followed stock rotation norms while allocating rice under the scheme.
Collector sought wider scrutiny
Confidential communications from the Balaghat Collector reportedly recommended verification of whether rice released for ethanol production actually reached the designated plants. The Collector also sought scrutiny of the allocation process, transportation chain, utilisation certificates and the roles of FCI officials, ethanol companies, transporters and rice mill owners.
The investigation currently covers nearly 5 lakh metric tonnes (50 lakh quintals) of government rice, valued at approximately Rs 1,160 crore at the subsidised allocation price.