FCI rejected the claim of rice embezzlement of Rs 1160 crore, called it misleading, investigation continues

Food Corporation of India (FCI) has issued a statement regarding the alleged embezzlement of rice supplied to make ethanol in Madhya Pradesh (MP Ethanol Rice Scam). The claim of Rs 1160 crore rice gobbler has been completely rejected. It has also been described as misleading. FCI said that there has been no embezzlement or diversion of 5 lakh metric tonnes of rice released for ethanol production in Madhya Pradesh.

FCI clarified that only Rs 5 lakh 63 thousand irregularities have come to light. Whose investigation is currently going on. This case pertains to diversion of 490 bags i.e. 242.50 quintals of rice. Whose estimated cost is around Rs 25.63 lakh, not Rs 1160 crore.

FCI released figures

2.98 LMT was released to distilleries for ethanol production for the state of Madhya Pradesh during the ethanol supply year 2024-25 at Rs 22.50 per kg. During ESY 2025.26 till June 30, 2026, 2.41 LMT of rice was released at Rs 23.20 per kg. Accordingly, a total of 5.39 LMT rice has been issued to the distillery so far. While allegations have been made of embezzlement of 5 LMT rice. This is the actual amount that was released to the distillery. Therefore it cannot be considered a hard diversion price.

Madhya Pradesh government detected irregularities, formed SIT

It has been clarified in the press notes that this matter was revealed by government agencies and action has been initiated even before it was published in media reports. Madhya Pradesh government has formed a SIT regarding this matter. Balaghat SP has deployed the investigation team at his level. Apart from this, Madhya Pradesh Steel Civil Supplies Corporation has imposed a penalty of Rs 42.12 lakh and the concerned rice mill has also been blacklisted. The irregularities have been identified by the Monetary System of the Government and timely administrative and legal action has also been initiated.

Investigation into the matter continues, subsidy banned

Irregularities in the movement of rice consignments were detected in the first week of June 2026. After which a notice was immediately issued to the distillery and an FIR was registered in the state food department on June 5. A joint team of DFPD and FCI officials was sent. On-site inspection was conducted on June 11. FCI has also put a hold on the security amount deposited by Sambandh Distillery till the investigation is completed. Further allocation of rice to the firm has also been stopped. NABARD has also been instructed to stop interest subsidy. The investigation of the case is still going on.