FCI denied States’ request for food grains under OMSS

Published: 29th 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).

Background

The Central government recently decided to exclude state governments from the purview of OMSS to maintain adequate stock levels in the central pool while controlling prices.
Reason: The government's decision to discontinue the sale of wheat and rice under OMSS aims to control food inflation and protect the interests of consumers.
State governments had alleged that such a move was against the interest of the poor

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.

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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