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

  • Published
    24th Jun, 2023
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.

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