Central Idea

The Department of Food and Public Distribution has proposed a plan to source rice from the Food Corporation of India (FCI) under the Open Market Sale Scheme (OMSS) for consumer sales.
The FCI is providing quality rice under OMSS at a reserve price of ₹29 per kg.

About Open Market Sale Scheme (OMSS)

	Details
Purpose of OMSS	To sell government-owned food grains (wheat and rice) in the open market to enhance supply and moderate prices, especially during lean seasons and in deficit regions.
Implementing Agency	Food Corporation of India (FCI)
Components of OMSS	1. Sale of wheat to bulk consumers/private traders through e-auction. 2. Sale of wheat through e-auction by dedicated movement. 3. Sale of Raw Rice Grade ‘A’ to bulk consumers/private traders through e-auction.
Method of Selling	Through e-auction for transparency, conducted weekly using the platform of NCDEX (National Commodity and Derivatives Exchange Limited).
Participants	State Governments/Union Territory Administrations and private entities can participate in the e-auction. States procure additional food grains through OMSS for distribution under the National Food Security Act,2013 (NFSA).

Current Inflation Rate: The annual inflation rate of rice has been around 12% for the past two years, accumulating over time and raising concerns.
Objective: The department aims to reduce this inflation rate and make rice more affordable for consumers.

Enhance the supply of food grains: The OMSS helps to enhance the supply of food grains, especially wheat, during the lean season and moderates the open market prices, especially in deficit regions.
Prevent wastage and deterioration of food grains: The OMSS also helps to prevent wastage and deterioration of food grains in FCI godowns due to a lack of storage space and proper maintenance.
Provides an alternative source of food grains: The OMSS provides an alternative source of food grains for bulk consumers, state governments, UTs and private parties who participate in various schemes and programmes such as ethanol production under biofuel policy.
Generates revenue for the FCI: The OMSS generates revenue for the FCI and reduces its subsidy burden on the central government. The FCI sells food grains under OMSS at pre-determined prices which are higher than the minimum support prices (MSPs) paid to farmers for procurement.

Low demand from the buyers: The OMSS faces low demand from buyers due to high reserve prices fixed by the FCI, which are often above the market prices.
Logistical challenges: The OMSS also faces logistical challenges such as transportation, handling and quality issues of food grains, which affect the timely delivery and customer satisfaction.
Limited impact on stabilizing the market prices: The OMSS has a limited impact on stabilizing the market prices as it accounts for a small share of the total food grain supply and demand in the country.
Does not address the structural problems: The OMSS does not address the structural problems of food grain management such as procurement, distribution and buffer stocking policies, which need to be reformed to ensure food security and fiscal prudence.

Revise the reserve prices of food grains: The FCI should revise the reserve prices of food grains under OMSS based on the prevailing market conditions and demand-supply situation to attract more buyers and clear the excess stocks.
Improve logistics and quality management: The FCI should improve its logistics and quality management system to ensure timely delivery and good quality of food grains under OMSS.
Diversify product portfolio: The FCI should diversify its product portfolio under OMSS to include coarse grains, pulses and oilseeds, which are also essential for nutrition security and have a higher demand in the market.
Coordinate with state governments: The FCI should coordinate with state governments, UTs and other stakeholders to ensure effective implementation and monitoring of OMSS and address any grievances or complaints arising from it.

It is a statutory body set up in 1965 (under the Food Corporation Act, 1964) under the Ministry of Consumer Affairs, Food and Public Distribution, Government of India.
It was set up against the backdrop of a major shortage of grains, especially wheat, in the country.
Currently, FCI is mandated with three basic objectives:

To provide effective price support to farmers;
To procure and supply grains to PDS for distributing subsidised staples to economically vulnerable sections of society; and
Keep a strategic reserve to stabilise markets for basic foodgrains.