India Halts Rice, Wheat Sales to State Govts to Curb Price Surge

The sale of rice and wheat from the central pool to state governments under the Open Market Sale Scheme (OMSS) has been halted by the Centre. This decision will have an impact on certain states, such as Karnataka, which have been providing free grains to the underprivileged.

The Karnataka government had made a request for 13,819 tonnes of rice at the rate of Rs 3,400 per quintal for its own scheme under the OMSS, without an e-auction for the month of July. However, the Centre has already communicated its decision to discontinue the sale of wheat and rice under the OMSS for state governments, as stated in a recent order issued by the Food Corporation of India (FCI).

However, the sale of rice under the OMSS will continue for northeastern states, hilly states, and states facing law and order situations, as well as natural calamities. The existing rate of Rs 3,400 per quintal will be maintained for these states, as mentioned in the order. Additionally, the FCI has the authority to sell rice from the central pool stock to private parties under the OMSS, based on market requirements, in order to regulate market prices.

In a separate statement, the Food Ministry explained that the exclusion of state governments' schemes from the OMSS (D) is a measure taken to ensure adequate stock levels in the central pool while keeping inflationary trends in check for this particular period.

On June 12, the central government implemented stock limits on wheat until March 31, 2024, as a measure to control hoarding and stabilize open market prices. Additionally, it announced the offloading of both rice and wheat under the OMSS (Open Market Sale Scheme).

The government specified the sale of 15 lakh tonnes of wheat from the central pool to flour mills, private traders, and wheat product manufacturers through e-auction. However, the quantity of rice for sale under the OMSS was not determined for these traders.

As per the statement, the first auction for wheat would take place on June 28, marking the beginning of the 2023-24 financial year.

Under the revised OMSS (D), the permissible quantity for a single bid by a buyer ranges from 10 to 100 tonnes. This marks a significant reduction compared to the previous sale, where the maximum allowed quantity per bid was 3,000 tonnes. The Ministry explained that this adjustment aims to accommodate more small and marginal buyers, ensuring a broader reach of the scheme. The intention behind this change is to facilitate the prompt availability of stocks sold under OMSS (D) to the general public.

This decision has been prompted by the slow progress of the monsoon and the escalating prices of rice and wheat. Official data reveals that rice prices have risen by up to 10% over the past year at the mandi level, with an additional 8% increase occurring in the last month.

The upcoming monsoon rains are of great significance, considering that approximately 80% of the country's total rice production takes place during the kharif season. The sowing process for rice will commence in the following month.

The central government introduced the OMSS policy for 2023 on January 26. This policy allowed states to procure rice (including fortified rice) and wheat directly from the Food Corporation of India (FCI) for their respective schemes, without participating in e-auctions.

Typically, the OMSS is implemented to sell food grains, primarily wheat and rice, at predetermined prices in the open market during the lean season. This initiative aims to enhance the domestic availability of these essential grains and stabilize open market prices, especially in regions facing shortages.