Table of Contents
Introduction
The Food Corporation of India (FCI) recently implemented quantity restrictions and denied states’ participation in the Open Market Sale Scheme (OMSS). In response, several states have begun exploring alternative methods to procure wheat and rice. This article will provide an overview of the OMSS, discuss the recent revisions and restrictions, examine the reactions of states, and shed light on the role of the Food Corporation of India.
Open Market Sale Scheme (OMSS)
The OMSS is a program initiated by the Food Corporation of India to facilitate the sale of surplus food grains, particularly wheat and rice, from the central pool in the open market . Its primary objectives include enhancing food grain supply during lean seasons, moderating open market prices to control inflation, ensuring food security in deficit regions, and facilitating the sale of surplus food grains.
The implementation of the OMSS involves conducting e-auctions by the FCI for traders, bulk consumers, and retail chains. These auctions allow participants to purchase specified quantities of food grains at pre-determined prices. Additionally, states have the opportunity to procure additional food grains through OMSS for distribution under the National Food Security Act, 2013.
Recent Revised OMSS Restrictions
The OMSS recently underwent revisions aimed at promoting wider participation and accommodating small and marginal buyers. One significant change is the reduction in the maximum allowed quantity per bid from 3,000 metric tonnes to a range of 10-100 metric tonnes. This adjustment encourages competitive bids from smaller buyers, curbs retail prices, and fosters a more level playing field.
Discontinuation of OMSS Sales
The Central Government decided to discontinue the sale of rice and wheat from the central pool to State Governments under the OMSS. Furthermore, private bidders are no longer permitted 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, this discontinuation aims to streamline the distribution and allocation of food grains.
The Central Government has provided three reasons for discontinuing the Open Market Sale Scheme (OMSS) for state governments. However, these reasons are not convincing. Firstly, the government claims that OMSS can better stabilize prices if grain is released through the market rather than through states or the Public Distribution System (PDS), but there is no guarantee that private traders will pass on the benefits to consumers. Secondly, the government expresses concerns about maintaining grain stocks at a comfortable level, but fails to mention that the current stock position is actually very comfortable, with stocks consistently exceeding buffer stock norms for the past five years. Lastly, the government argues that state governments will provide food grains to the same beneficiaries as under the National Food Security Act (NFSA) or state schemes, and that the central government has an obligation to the 600 million people not covered by the PDS. Overall, the central government’s reasons for discontinuing OMSS are questionable, and the arguments presented do not hold strong ground.
Reactions of States
The recent decisions regarding the OMSS have received criticism from states like Karnataka and Tamil Nadu. Karnataka, for instance, has temporarily replaced its free grain distribution scheme for below-poverty-line families, known as the Anna Bhagya Scheme, with cash transfers. This change was necessitated by the state’s inability to procure sufficient rice from the market at a reasonable cost within the required timeframe.
Role of Food Coorportion of India (FCI)
The Food Corporation of India is a statutory body established in 1965 to manage the food security system in India. It was created against the backdrop of a major shortage of grains, particularly wheat. The FCI’s responsibilities include maintaining buffer stocks of food grains to ensure food security during times of scarcity or crisis, as well as distributing food grains throughout the country for the public distribution system.
The Food Corporation of India (FCI) plays a crucial role in grain procurement for various purposes. Firstly, it supports producers by purchasing wheat and rice at minimum support prices (MSP). Secondly, it meets the needs of the Public Distribution System (PDS), which provides free monthly grain allocations to National Food Security Act (NFSA) households. Thirdly, the FCI’s grain stocks are utilized for price stabilization through the Open Market Sale Scheme (OMSS).
The FCI also plays a vital role in disposing of surplus food grains through methods like e-auctions. These auctions provide an opportunity for various entities, including traders, bulk consumers, and retail chains, to participate and purchase food grains from the central pool.
Conclusion
The recent imposition of quantity restrictions and denial of states’ participation in the Open Market Sale Scheme has prompted states to seek alternative methods of procuring wheat and rice. While the revisions to the OMSS aim to promote wider participation and level the playing field, the discontinuation of OMSS sales to states seeks to control inflationary trends and ensure food security obligations are met. The Food Corporation of India plays a crucial role in managing the food security system and facilitating the distribution of food grains throughout the country. As the situation evolves, it remains to be seen how states will navigate these changes and ensure the availability of essential food grains for their citizens.
