OPEN MARKET SALE SCHEME (Syllabus: GS Paper 3 – Economy)

Context: The Union government has allowed States to directly purchase rice from the Food Corporation of India (FCI) under the Open Market Sale Scheme (Domestic), bypassing the e-auction process.

Open Market Sale Scheme

• Definition: OMSS is a scheme where the Food Corporation of India (FCI) sells surplus stocks of wheat and rice through e-auctions in the open market.
• Purpose: The primary goal of OMSS is to dispose of surplus stocks held by FCI and regulate the prices of wheat in the open market.
• Auction Frequency: FCI conducts weekly auctions for OMSS wheat on the National Commodity and Derivatives Exchange Limited (NCDEX) platform.
• Role of NCDEX Platform: NCDEX is a commodity exchange in India that facilitates trading in various agricultural and other commodities.
• State Procurement: States can procure food grains through OMSS without participating in auctions to meet their needs beyond central pool allocations for National Food Security Act, 2013 beneficiaries.

Food Corporation of India

• About: The FCI is a government-owned corporation responsible for managing food security in India.
• Establishment: It was established in 1965 under the Food Corporation's Act of 1964 to ensure the adequate availability of food grains and maintain market price stability.
• Buffer Stocks: FCI maintains buffer stocks of food grains to guarantee food security during times of scarcity or crisis.
• Distribution Role: The FCI is tasked with distributing food grains across the country through the public distribution system.
• E-Auction Method: As part of its operations, FCI uses e-auctions to dispose of surplus food grains.