OPEN MARKET SCALE SCHEME
1. Context
States have been looking at alternative ways of procuring wheat and rice in after the Food Corporation of India’s (FCI) imposed quantity restrictions followed by the refusal to allow States to procure the two food grains through its Open Market Sale Scheme (OMSS).
2. What is Open Market Sale Scheme?
- Open Market Sale Scheme (OMSS) is implemented by the Food Corporation of India (FCI).
- OMSS involves selling surplus food grains, specifically wheat, and rice, from the central pool in the open market.
- The sale is conducted through e-auctions, allowing traders, bulk consumers, and retail chains to buy specified quantities at predetermined prices.
- States can also procure food grains through OMSS without participating in auctions to distribute to National Food Security Act (NFSA) beneficiaries.
- In the current year, OMSS was operationalized in January.
- By March 15, 2023, six weekly e-auctions of wheat were conducted, resulting in the offloading of 33.7 LMT (Lakh Metric Tons) of wheat and a 19% decrease in wheat prices.
- The next e-auction for wheat will start on June 28, while the bidding for rice will commence on July 5.
3. Changes to OMSS
- The Centre has restricted the quantity that a single bidder can purchase in a single bid under the OMSS.
- Earlier, the maximum quantity allowed per bid was 3,000 metric tonnes (MT) for a buyer.
- Now, the range has been reduced to 10-100 metric tonnes to accommodate more small and marginal buyers and ensure the wider reach of the scheme.
- The reduction in quantities aims to curb retail prices by breaking the monopolies of bulk buyers and encouraging more competitive bids from small buyers.
4. Discontinuation of Sales to States
- On June 13, the Centre sent a notification to the states, discontinuing the sale of rice and wheat from the central pool under OMSS to state governments.
- Private bidders are also disallowed from selling their OMSS supplies to state governments.
- The Centre claims to be meeting its obligations of distributing grains to 80 crore marginalized beneficiaries under the NFSA, while also having an obligation to the 60 crore common consumers affected by retail prices.
5. States' Reactions to OMSS Changes:
Karnataka
- Providing rice to marginalized families was a poll promise of the Congress government in Karnataka.
- Congress leaders accused the Centre of conspiring to fail the state government's poll guarantee by restricting the required amount of rice for implementing the scheme.
Tamil Nadu
- Tamilnadu is attempting to purchase 50,000 tonnes of rice from government agencies other than the Food Corporation of India (FCI).
- The state provides rice to all ration cardholders and used to buy from OMSS at a rate of around 35 rupees per kilogram, subsidizing it for distribution.
- The Union government's decision to stop the supply under OMSS has prompted the state to find an alternative solution.
6. Food Cooperation of India (FCI)
- It is a statutory body set up in 1965 (Under the Food Corporation Act, 1964 ) against the backdrop of a major shortage of grains. especially wheat in the country.
- It comes under the ownership of the Ministry of Consumer Affairs, Food and Public Distribution, Government of India.
- Headquarters: New Delhi
FCI was mandated with three basic objectives:
- To provide effective price support to farmers.
- To procure and supply grains to PDS for distributing subsidized staples to economically vulnerable sections of society.
- Keep a strategic reserve to stabilize markets for basic food grains.
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For Prelims: Open Market Sale Scheme (OMSS), Food Corporation of India (FCI), National Food Security Act (NFSA).
For Mains: 1. What is the Open Market Sale Scheme and how does it work? Why has the government made changes to the OMSS? (250 words)
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Previous year Questions
1. With reference to the provisions made under the National Food Security Act, 2013, consider the following statements: (UPSC 2018)
Which of the statements given above is/are correct? A. 1 and 2 only Answer: B 2. The economic cost of food grains to the Food Corporation of India is Minimum Support Price and bonus (if any) paid to the farmers plus (UPSC 2019) A. transportation cost only B. interest cost only C. procurement incidentals and distribution cost D. procurement incidentals and charges for godowns Answer: C |
Source: The Hindu
