A major alleged scam involving government-supplied fortified rice meant for ethanol production has come to light in Madhya Pradesh, triggering a large-scale police investigation. According to a Dainik Bhaskar investigation, rice worth an estimated ₹1,160 crore was allegedly diverted before reaching ethanol plants, with investigators suspecting the involvement of rice millers, ethanol plant operators, transporters and officials. A Special Investigation Team (SIT) is currently probing the case.
What is the allegation?
Investigators believe that around 5 lakh metric tonnes (50 lakh quintals) of fortified rice allocated by the government for ethanol production was diverted instead of being used for its intended purpose. The rice was allegedly routed through private rice mills and eventually found its way back into government warehouses, allowing multiple parties to profit from the same stock.
How was the alleged scam uncovered?
The investigation reportedly began after three truckloads of government rice dispatched from a warehouse in Balaghat to an ethanol plant in Chhindwara failed to reach their destination. One truck was later traced to a private rice mill instead of the ethanol plant, raising suspicions of a wider network. The SIT has since questioned over 40 people, seized 12 trucks, and arrested four individuals as part of the ongoing investigation.
How did the alleged diversion work?
According to investigators, ethanol plants received fortified rice from the government at subsidised rates. Instead of converting it into ethanol, the rice was allegedly sold to private rice mills. The mills then reportedly repackaged the rice in new gunny bags and deposited it back into government warehouses as custom-milled rice. Investigators also allege that those involved earned additional profits through milling charges and the sale of paddy in the open market.
Why is this case significant?
The rice involved was fortified rice, enriched with essential vitamins and minerals and intended to support government nutrition programmes. If the allegations are proven, the case could expose serious weaknesses in the monitoring of government grain distribution, ethanol procurement and warehouse management. Investigators are also examining whether existing monitoring systems and inspection mechanisms were bypassed, allowing the alleged diversion to continue undetected.
Investigation continues:
The SIT is continuing its probe to determine the full extent of the alleged fraud, identify all those involved and establish whether additional arrests or criminal charges are warranted. As of now, the allegations remain under investigation, and authorities have not announced final conclusions
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