No sale of rice, wheat under OMSS to states to check price rise

The Centre has discontinued the sale of rice and wheat from the central pool under the Open Market Sale Scheme (OMSS) to state governments to ensure that the inflationary trends are kept under control. The decision, however, might hit certain states, including Karnataka, which offer free grains to the poor. The Karnataka government had sought 13,819 tonnes of rice for its own scheme under the OMSS without e-auction for July at the rate of Rs 3,400 per quintal.

According to a recent order issued by the Food Corporation of India (FCI), "The sale of wheat and rice under the OMSS (domestic) for state governments is discontinued". However, 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 Rs 3,400 per quintal. FCI may liquidate rice under the OMSS to private parties from the central pool stock as per the requirement in order to moderate the market prices.

In a separate statement, the Food Ministry said, "In order to ensure that the inflationary trends are kept under control while ensuring adequate stock levels in the central pool, it has been decided to exclude state governments' scheme from the ambit of OMSS (D), this time". On June 12, the central government while imposing stock limits on wheat till March 31, 2024, had also announced offloading of both rice and wheat under the OMSS to cool down the open market prices and curb hoarding. It had announced the sale of 15 lakh tonne of wheat under the OMSS from the central pool to flour mills, private traders and manufacturers of wheat products through e-auction. It had, however, not fixed the quantity of rice for these traders for sale under the OMSS.

According to the statement, the first auction of wheat would be held on June 28 for the financial year 2023-24. In this OMSS (D), the quantity that a bidder can purchase in a single bid range from 10-100 tonne. During the earlier sale, the maximum quantity allowed was 3,000 tonne per bid for a buyer. "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," the ministry added.

The move comes amid the slow progress of monsoon and rising prices of rice and wheat. Rice prices have increased by up to 10 per cent in the last one year at the mandi level, while by 8 per cent in the last one month, as per the official data.

Monsoon rains are crucial as about 80 per cent of the country's total rice production is grown during the kharif season and sowing will begin next month onwards. It may be noted that on January 26, the central government had come out with the OMSS policy for 2023 under which states were allowed to buy both rice (including fortified rice) and wheat from the FCI for their own schemes without participating in e-auction.

Usually, the OMSS is operationalised to sell foodgrains, especially wheat and rice, at pre-determined prices in the open market from time to time to bulk consumers and private traders during the lean season to improve domestic availability of these two key grains and cool down open market prices, especially in deficit regions.