Open Market Sale Scheme(OMSS)

Open Market Sale Scheme(OMSS)

News: The OMSS has been in news recently for recent changes made.

What is OMSS?
• The Open Market Sale Scheme (OMSS) is a government initiative in India aimed at reducing the excess stock of food grains held by the Food Corporation of India (FCI) and state agencies.
• Under the scheme, the government sells the excess stock of food grains in the open market through e-auctions and other means to ensure that the stocks do not go waste and also to moderate the open market prices, especially in the deficit regions.
• The scheme has three components - sale of wheat to bulk consumers/private traders, sale of wheat by dedicated movement, and sale of raw rice grade ‘A’ to bulk consumers/private traders.
• The scheme is conducted through a transparent process using the platform of commodity exchange NCDEX (National Commodity and Derivatives Exchange Limited).
• The scheme is also open to state governments and union territories if they require wheat and rice outside TPDS (Targeted Public Distribution System) and OWS (Other Welfare Schemes) However, certain changes have been made recently on it.

What are the changes made?
• Firstly, the government has restricted the quantity that a single bidder can purchase in a single bid under the OMSS. Previously, buyers were allowed to buy a maximum quantity of 3,000 metric tonnes (MT) per bid. Now, it will range from 10-100 metric tonnes (MT). This was done with the intention to allow small traders to be part of procurement of rice.
• Secondly, it has discontinued the sale of rice and wheat from the central pool under the OMSS to State governments.

Why were the changes made?
• As mentioned earlier, the bidding quantities were reduced to accommodate more small and marginal buyers to be part of bidding process. The government has argued that it will allow the supplies to reach the general public immediately.
• Secondly, the move allows government give a signal to the market that the stock is with the government and will use it in the interest of common man to bring down the prices.
• On discontinuation of OMMS grains to states the centre argues that it has an obligation towards consumers who are not covered by the NFSA but are affected by fluctuations in retail prices of food grains. It argued that while the state governments will allocate food grains to the NFSA beneficiaries, as well as for beneficiaries of state-specific schemes, the interest of general consumers has been ignored.

What needs to be done?
• When it comes to implementing State schemes in the food sector, the States must identify their own sources, and in a cost-effective manner. For example, Odisha and Chhattisgarh procure food grains locally to add on to PDS coverage.
• Whatever quantity of food grains is available in the country should be used for the good of the entire population of 140 crore people, not for a certain class or category of people of a particular state or region.
Source – Economic Times, The Hindu