The Open Market Sale Scheme
Context:
- States have been looking at alternative ways of procuring wheat and rice in the after the Food Corporation of India’s (FCI) imposed quantity restrictions followed by the refusal to allow States to procure the two food grains through its Open Market Sale Scheme (OMSS).
- The Centre has made it clear that the reason for restricting supplies per bidder and eventually excluding states from procuring through auctions was to curb inflation and regulate supply, States such as Karnataka and Tamil Nadu have criticised the government for engaging in “politics” at the expense of marginalised beneficiaries of State welfare schemes.
What is the Open Market Sale Scheme?
- Under the Open Market Sale Scheme, the FCI from time to time sells surplus food grains from the central pool especially wheat and rice in the open market to traders, bulk consumers, retail chains and so on at predetermined prices.
- The FCI does this through eauctions where open market bidders can buy specified quantities.
- States are also allowed to procure food grains through the OMSS without participating in the auctions, for their needs beyond what they get from the central pool to distribute to NFSA (National Food Security Act) beneficiaries.
How has the Centre revised the OMSS?
- The Centre decided to restrict the quantity that a single bidder can purchase in a single bid under the OMSS.
- While the maximum quantity allowed earlier was 3,000 metric tonnes (MT) per bid for a buyer, it will now range from 10100 metric tonnes.
- The FCI claims that the quantities have been reduced this time “to accommodate more small and marginal buyers and to ensure wider reach of the scheme”.
- The objective behind the move is also to curb retail prices as allowing smaller bids should ideally break monopolies of bulk buyers, allowing more competitive bids by small buyers.
Syllabus: Prelims
