The Centre has discontinued the sale of rice and wheat from the central pool under the Open Market Sale Scheme (OMSS) to state governments, a move that will hit some states, including Karnataka, offering free grains to the poor.
This decision has already been conveyed to the Karnataka government, which had sought 13,819 tonne 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, natural calamities at an existing rate of Rs 3,400 per quintal, it said.
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, it added.
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 the sale under the OMSS.
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.
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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, 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.