Open Market Sale Scheme for Wheat and Rice

Why in news?

• States have been looking at alternative ways of procuring wheat and rice in the aftermath of the Food Corporation of India’s (FCI) quantity restrictions followed by the refusal to allow states to procure the two food grains through its Open Market Sale Scheme (OMSS)

What is the Open Market Sale Scheme?

• Firstly, the procurement of food grains like wheat and paddy for the central pool happens in Rabi and Kharif marketing seasons by the FCI and State corporations according to procurement estimates finalised by the government of India before the seasons.
• These purchases happen as per the Minimum Support Price. From the central pool, the government has to set aside wheat and rice for the 80 crore beneficiaries of free food grains under the National Food Security Act (NFSA), maintain a buffer stock, and have a marketable surplus.
• Under the Open Market Sale Scheme, the FCI from time to time sells surplus food grains from the central pool especially wheat and rice in the open market to traders, bulk consumers, retail chains and so on at pre-determined prices.
• The Corporation does this through e-auctions where open market bidders can buy specified quantities at the prices set at the start of a cycle and revised routinely.
• Usually, states are also allowed to procure food grains through the OMSS without participating in the auctions, for their needs beyond what they get from the central pool to distribute to NFSA beneficiaries.

Purpose of the scheme:

• The idea is to activate the OMSS during the lean season, the time between harvests, to improve and regulate domestic supply and availability of the two grains and bring down their prices in the open market; essentially making the scheme a measure to curb food grain inflation.

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.

PRACTICE QUESTION

With reference to ‘Open Market Sale Scheme’, consider the following statements:

1. Under the scheme, the FCI from time to time sells surplus food grains from the central pool in the open market to traders

2. Recently the Central Government decided to discontinue the sale of rice and wheat from the central pool to state governments under the OMSS

Which of the statements given above is/are correct?

(a) 1 only

(b) 2 only

(c) Both 1 and 2

(d) Neither 1 nor 2

Answer