Open Market Sale Scheme for Wheat and Rice

• 03 Jul 2023

For Prelims: Food Corporation of India, Open Market Sale Scheme, Wheat, Rice

For Mains: Role of OMSS to enhance food grain supply, Food Corporation of India (FCI) in managing the food security.

Why in News?

Recently, in response to the Food Corporation of India's (FCI) imposition of quantity restrictions and denial of states' participation in the Open Market Sale Scheme (OMSS), states have been exploring alternative methods to procure wheat and rice.

What is the Open Market Sale Scheme?

• About:
  • The OMSS is a program implemented by the FCI to facilitate the sale of surplus food grains, primarily wheat, and rice, from the central pool in the open market.
• Purpose and Objectives:
  • Enhance food grain supply during lean seasons.
  • Moderate open market prices and control inflation.
  • Ensure food security and availability of grains in deficit regions.
  • Facilitate the sale of surplus food grains from the central pool.
• Implementation and Process:
  • Conduct e-auctions by the FCI for traders, bulk consumers, and retail chains to purchase specified quantities of food grains at pre-determined prices.
  • Allow states to procure additional food grains through OMSS for distribution under the National Food Security Act,2013 (NFSA).
  • FCI conducts weekly auctions for the OMSS for wheat on the platform of the National Commodity and Derivatives Exchange Limited (NCDEX).
    • NCDEX is a commodity exchange platform in India that provides a platform for trading in various agricultural and other commodities.

What are the Recent Revised OMSS Restrictions?

• Revised OMSS Restrictions:
  • The OMSS underwent a recent revision with a focus on limiting the quantity that a single bidder can purchase in a single bid.
  • Previously, the maximum allowed quantity per bid was 3,000 metric tonnes. However, it has now been reduced to a range of 10-100 metric tonnes.
  • The aim of this change is to promote wider participation by accommodating small and marginal buyers.
  • By encouraging competitive bids from smaller buyers, the revised OMSS seeks to curb retail prices and create a more level playing field.
• Discontinuation of OMSS Sales to States:
  • The Centre decided to discontinue the sale of rice and wheat from the central pool to state governments under the OMSS.
  • Additionally, private bidders are no longer allowed to sell their OMSS supplies to states.
  • The rationale behind this decision is to control inflationary trends and maintain adequate stock levels in the central pool.
  • By ensuring that food security obligations are met, the discontinuation of OMSS sales to states aims to streamline the distribution and allocation of food grains.

How have the States Reacted?

• Karnataka and Tamil Nadu have criticized the Centre's decision.
• Karnataka has temporarily replaced its free grain distribution scheme for below-poverty-line (BPL) families, known as the Anna Bhagya Scheme, with cash transfers to beneficiaries due to being unable to procure enough rice in the market at a reasonable cost in time to meet the requirements of the scheme.

What is the Food Corporation of India?

• FCI is a statutory body set up in 1965 under the Food Corporations Act of 1964. It was established against the backdrop of a major shortage of grains, especially wheat.
• The FCI manages the food security system in India.
• The FCI also maintains buffer stocks of food grains to ensure food security during times of scarcity or crisis.
• The FCI is also responsible for distributing foodgrains throughout the country for the public distribution system.
• FCI also conducts e-auction as one of the methods to dispose of its surplus food grains.

UPSC Civil Services Examination, Previous Year Question (PYQ)

Prelims

Q1. With reference to the provisions made under the National Food Security Act, 2013, consider the following statements: (2018)

1. The families coming under the category of ‘below poverty line (BPL)’ only are eligible to receive subsidised food grains.
2. The eldest woman in a household, of age 18 years or above, shall be the head of the household for the purpose of issuance of a ration card.
3. Pregnant women and lactating mothers are entitled to a ‘take-home ration’ of 1600 calories per day during pregnancy and for six months thereafter.

Which of the statements given above is/are correct?

(a) 1 and 2 only
(b) 2 only
(c) 1 and 3 only
(d) 3 only

Ans: (b)

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Mains

Q.1 In what way could replacement of price subsidy with Direct Benefit Transfer (DBT) change the scenario of subsidies in India? Discuss. (2015)

Source: TH