OPEN MARKET SALE SCHEME - ECONOMY
News: Centre stops sale of wheat, rice to States under OMSS
What is in the news?
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Recently, The Union
government has discontinued the sale of
rice and wheat from the central pool under the Open Market Sale Scheme (OMSS)
to State governments.
Key takeaways from the news:
●
The Food Corporation of
India (FCI), however, said the sale of rice under the OMSS will be continued for northeastern States, hilly
States and States facing law and order situations and natural calamities,
at an existing rate of ₹3,400 per quintal.
●
FCI may liquidate rice
under the OMSS to private parties as per the requirement in order to moderate
the market prices.
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The Centre has made it
clear that the reason for first restricting supplies per bidder and eventually
excluding states for the OMSS was to curb inflation and regulate supply.
●
The maximum quantity allowed earlier was 3,000MetricTonnes (MT) per bid
for a buyer; it will now range from
10-100MetricTonnes (MT).
Open Market Scale Scheme:
●
Firstly, the procurement of food grains like wheat
and paddy for the central pool happens in Rabi and Kharif marketing seasons by the FCI and State corporations
according to procurement estimates finalized by the government of India before
the seasons.
●
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 Corporation does this
through e-auctions where open market
bidders can buy specified quantities at the prices set at the start of a cycle
and revised routinely.
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FCI conducts weekly
auctions for the OMSS for wheat on the platform of the National Commodity and Derivatives Exchange Limited (NCDEX).
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Usually, 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 beneficiaries.
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The idea is to activate
the OMSS during the lean season, the time between harvests, to improve and
regulate domestic supply and availability of the two grains and bring down
their prices in the open market; essentially making the scheme a measure to
curb food grain inflation.