Changes in Open Market Sale Scheme (OMSS)

About Open Market Sale Scheme (OMSS)

About Open Market Sale Scheme
  • Open Market Sale Scheme (OMSS) refers to selling of foodgrains by Government / Government agencies at predetermined prices in the open market from time to time 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.
  • Objective: Food Corporation of India (FCI) on the instructions from the Government, sells wheat and rice in the open market from time to time to enhance the supply of wheat and rice especially during the lean season and to moderate the open market prices especially in the deficit regions. 
  • Mode of Auction: For transparency in operations, the Corporation has switched over to e- auction for sale under Open Market Sale Scheme (Domestic). The FCI conducts a weekly auction to conduct this scheme in the open market using the platform of commodity exchange NCDEX (National Commodity and Derivatives Exchange Limited). 
  • Participants: The State Governments/ Union Territory Administrations are also allowed to participate in the e-auction, if they require wheat and rice outside the Targeted Public Distribution Scheme (TPDS) and Other Welfare Schemes (OWS).
  • Pricing: The reserve price is fixed by the government. In the tenders floated by the FCI, the bidders cannot quote less than the reserve price.
  • Components: The present form of OMSS comprises 3 schemes as under:
    • Sale of wheat to bulk consumers/private traders through e-auction.
    • Sale of wheat to bulk consumers/private traders through e-auction by dedicated movement.
    • Sale of Raw Rice Grade ‘A’ to bulk consumers/private traders through e-auction.
  • Recent Changes to OMSS:
    • Limits on Quantity Procured: Previously, the Department had already imposed restrictions on the sale of wheat under OMSS(D) to a bidder, limiting the quantity to 3,000 tonnes. Now, under the Open Market Sale Scheme (Domestic) or OMSS(D), the maximum quantity that a bidder can purchase in a single bid is now restricted to ranges from 10 to 100 metric tons. 
    • Enhanced Reach: This reduction in quantities aims to accommodate more small and marginal buyers, ensuring a wider reach of the scheme and immediate availability of stocks to the public.
    • Exclusion of State Governments: As part of the revised policy, the government has also decided to exclude state governments from the purview of OMSS(D) to maintain adequate stock levels in the central pool while controlling prices.
    • Exception: For the North-Eastern states, hilly states, and states facing law and order issues or natural calamities. The sale of rice for these exceptional cases will continue at the existing rate of ₹3400 per quintal. 
  • Why Were the Changes Needed?
    • Control Inflation: 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. 
    • Accommodate Small Buyers: The quantities have been reduced this time to accommodate more small and marginal buyers and to ensure a wider reach of the scheme. This will facilitate the release of stocks sold under OMSS (D) to reach the general public immediately.
    • Meet Other Obligations: This will also lead to higher availability of foodgrains for the Department’s other obligations such as distribution of free food grains to 80 crore beneficiaries under the Pradhan Mantri Garib Kalyan Yojana.
    • Implications: States now will have to procure the foodgrains from the open market at a higher cost. This will add to the already burgeoning food subsidy bill.

Food Corporation of India (FCI)

  • It is a statutory body set up in 1965 (under the Food Corporation Act, 1964) against the backdrop of major shortage of grains, especially wheat, in the country.
  • Nodal Ministry: Ministry of Consumer Affairs, Food and Public Distribution, Government of India.
  • Headquarters: New Delhi
  • Vision: Ensuring Food Security for citizens of the country.
  • Objectives: FCI aims to fulfil following objectives of the Food Policy
    • Effective price support operations for safeguarding the interests of the farmers.
    • Distribution of foodgrains throughout the country for the public distribution system.
    • Maintaining satisfactory level of operational and buffer stocks of foodgrains to ensure National Food Security
  • Mission:
    • Efficient procurement at Minimum Support Price (MSP), storage and distribution of food grains.
    • Ensuring availability of food grains and sugar through appropriate policy instruments; including maintenance of buffer stocks of food grains.
    • Making food grains accessible at reasonable prices, especially to the weak and vulnerable sections of the society under PDS.
  • Since its inception, FCI has played a significant role in India’s success in transforming the crisis management oriented food security into a stable security system.

PYQ 2018: With reference to the provisions made under the National Food Security Act, 2013, consider the following statements:

    1. The families coming under the category of ‘below poverty line (BPL)’ only are eligible to receive subsidised food grains.

    1. The oldest woman in a household, of age 18 years or above, shall be the head of the household for the purpose of issuance of a ration card.

    1. Pregnant women and lactating mothers are entitled to a ‘take-home ration’ of 1600 calories per day during pregnancy and for six months thereafter.

Which of the statements given above is/are correct?

(a) 1 and 2 only

(b) 2 only

(c) 1 and 3 only

(d) 3 only

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Answer: (b)

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