India, Oct. 22 -- India almost entirely imports its crude oil requirements. This entails a large foreign exchange drain and adds to the even bigger non-oil trade deficit. When seen in this context, the idea of promoting biofuel must have sounded like an extremely attractive proposition. India is one of the world's largest agricultural producers of crops such as sugarcane and cereals, and part of that output could be diverted to making ethanol for fuel blending; that would have been the argument behind India's biofuels policy.

What the proponents of this idea perhaps forgot is that India is also the most populous country in the world. Most Indians spend a large part of their household budgets on food and they are extremely sensitive to fo...