FCI Clarifies: Only Rs 5.63 Lakh Rice Diverted, Not Rs 1,160 Crore
The Food Corporation of India (FCI) has strongly refuted media reports alleging a massive rice diversion scam in Madhya Pradesh, calling them 'factually incorrect and completely baseless.' The central grain handling agency clarified that the actual value of rice under investigation is only Rs 5.63 lakh, far lower than the Rs 1,160 crore figure cited in some reports.
The controversy began when a truck carrying rice from an FCI warehouse to an ethanol plant was found inside a private rice mill. This led to a wider probe involving 17 seized trucks, 56 rice mills, and 22 ethanol plants. Investigators sought to determine how much of the nearly 5 lakh metric tonnes of government rice allocated for ethanol production was actually converted into ethanol.
In a statement on X, FCI said: 'Certain media reports have alleged large-scale diversion of Food Corporation of India (FCI) rice supplied for ethanol production in Madhya Pradesh, suggesting that around 5 lakh metric tonnes (LMT) of rice worth approximately Rs 1,160 crore was diverted and misappropriated. The reports are not only factually incorrect but also completely baseless.'
FCI explained that a total of 5.39 LMT of rice had been issued to distilleries since 2024-25. The Rs 1,160 crore figure was calculated based on the issue price of 5 LMT rice at Rs 23.20 per kg, assuming the entire quantity was misappropriated. However, FCI clarified that this amount was the legitimate payment made by distilleries for the rice they lifted.
'The investigation presently underway is not related to the entire quantity of rice supplied under the ethanol blending programme. It pertains to an alleged diversion of 490 bags (242.50 quintals) of rice involving an estimated value of about Rs 5.63 lakh. Therefore, the media reports equating the entire value of rice supplied under the ethanol blending programme with the alleged diversion are misleading,' the statement added.
FCI also emphasised that the matter was detected by government agencies themselves, and prompt action was initiated well before the media reports were published. Following detection of irregularities in the movement of rice consignments during the first week of June 2026, FCI immediately issued notices to the concerned distillery, and the state food department registered an FIR on 5 June 2026.
The Madhya Pradesh government has constituted a Special Investigation Team (SIT) to probe the alleged scam. The concerned rice mill has been asked to pay a penalty of Rs 44.12 lakh and has been blacklisted. FCI said that the government's own monitoring mechanism detected the misappropriation, and action has already been initiated.
'The matter continues to be under investigation, and appropriate action will be taken against all persons found responsible in accordance with the law,' FCI added.
Background reports indicate that the FIR and confidential documents from the Balaghat Collector suggest subsidised rice was sold to private rice mills. The stock had been supplied to ethanol plants at about Rs 2,320 per quintal to boost fuel production. The same plant operators or their representatives allegedly sold this rice to millers at between Rs 2,600 and 3,000 per quintal, earning a margin without producing ethanol. A total of 22 ethanol plants across 17 districts received government rice under the same subsidised scheme, and investigators are determining which plants may have been involved.
