States look for alternatives as Centre restricts FCI purchase

Subject : Schemes

Concept :

The Union Government has recently discontinued the sale of wheat and rice under the Open Market Sale Scheme (OMSS) to state governments, except for some northeastern, hilly, and calamity-hit states.
This decision will affect some states, such as Karnataka, that offer free grains to the poor under their schemes.

Details

The Karnataka government had requested 13,819 tonnes of rice for July from the Food Corporation of India (FCI) under the OMSS without e-auction. But the FCI has rejected the request and informed the state that the sale of wheat and rice under the OMSS for state governments is discontinued.
The FCI has said that it will continue to sell rice under the OMSS to private parties from the central pool stock as per the requirement to moderate the market prices.
The discontinuation of the OMSS for state governments may have implications for food security and price stability in some regions.
The states that depend on the OMSS for their welfare schemes may have to procure grains from other sources or reduce their coverage. The FCI may also face challenges in managing its surplus stocks and preventing wastage.

Open Market Sale Scheme (OMSS)

The Open Market Sale Scheme (OMSS) is a government initiative in India aimed at reducing the excess stock of food grains held by the Food Corporation of India (FCI) and state agencies.
The scheme allows the Food Corporation of India (FCI) to sell wheat and rice to bulk consumers, state governments, and private parties through e-auctions at predetermined prices.

Features of OMSS

The FCI conducts weekly auctions through e-auctions in the open market to sell surplus stocks of wheat and rice.
The reserve price of wheat and rice for sale under OMSS is fixed by the Department of Food and Public Distribution (DFPD) every year.
The reserve price is kept uniform throughout the country without adding any further freight to facilitate buyers to lift stocks from any place at ease.
The sale of wheat and rice under OMSS is undertaken throughout the year in the non-procuring states and during the non-procurement period in the procuring states.
The quantum of wheat and rice for sale under OMSS is decided by the DFPD based on the availability and demand of food grains.
The surplus procuring states (paddy/rice) are not allowed to participate in e-auction for the purchase of rice for their state schemes and they are advised to retain stocks under the state pool for their schemes.