FCI denied States’ request for food grains under Open Market Scheme

Context

The Central government has restricted the supply of food grains through the Open Market Sale Scheme (OMSS) to 100 metric tonnes (MT).

• State governments had alleged that such a move was against the interest of the poor.

Background:

• As per a recent move, the Central government has decided to exclude state governments from the purview of OMSS (D) to maintain adequate stock levels in the central pool while controlling prices.
• The decision was made following the recommendation of the Inter-Ministerial Committee (IMC) meeting held on 8 June.
• The Department has already imposed restrictions on the sale of wheat under OMSS (D) to states, limiting the quantity to 10,000 tonnes.

Open Market Sale Scheme (OMSS):

• OMSS refers to the selling of food grains by the government/government agencies at predetermined prices in the open market from time to time.
• This scheme aims to enhance the supply of grains, especially during the lean season and thereby to moderate the general open market prices, especially in the deficit regions.
• The Food Corporation of India (FCI) on instructions from the Government sells wheat and rice in the open market from time to time.
• This enhances the supply of wheat and rice especially during the lean season and moderates the open market prices, especially in the deficit regions.

About the move:

• The government’s decision to discontinue the sale of wheat and rice under OMSS (D) aims to control food inflation and protect the interests of consumers.
• The maximum quantity to be sold through OMSS was limited to accommodate small wheat processors and traders.
• The Food Corporation of India (FCI) made it clear that Centre’s priority will remain to curb the inflation.
• Following the government’s order, the FCI is going to conduct the e-auctions of wheat and rice to check the inflationary trends.

Possible Impacts:

Positive	Negative
Ensuring a wider reach of the scheme and immediate availability of stocks to the public. It will control food inflation and protect the interests of consumers.	Temperature fluctuations affecting agriculture production can lead to the release of stocks from the FCI under the OMSS (D) program. Food distribution in states can be affected, leading to shortage of food grains.

 Role of FCI:

• The Food Corporation of India sells surplus stocks of wheat and rice under Open Market Sale Scheme (Domestic) at pre-determined prices through e-auction in the open market from time to time to enhance the supply of food grains.
• This procedure is followed especially during the lean season and thereby moderates the open market prices especially in the deficit regions.
• 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.