The Open Market Sale Scheme for wheat and rice

• States have been looking at alternative ways of procuring wheat and rice 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).

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 at pre-determined prices.
• FCI does this through e-auctions 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.

OMSS Revision by the Centre

• 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 10-100 metric tonnes.
• The FCI claims that the quantities have been reduced to accommodate more small and marginal buyers and to ensure wider reach of the scheme.
• It also aims to curb retail prices as allowing smaller bids should ideally break monopolies of bulk buyers
• Later, the Centre also stopped the sale of rice and wheat from the Central pool under the OMSS to State governments
• It even disallowed private bidders to sell their OMSS supplies to state governments.

States reaction

• The Opposition parties accused Centre of conspiring to “fail” the State government’s poll guarantee by ensuring the State did not receive the required amount of rice to implement its schemes.