What is Open Market Sale Scheme (OMSS)?

About Open Market Sale Scheme (OMSS):

• Under OMSS, the Food Corporation of India (FCI) sells surplus stocks of wheat and rice at pre-determined prices through e-auction in the open market.
• Objective: To enhance the supply of food grains, especially wheat, during the lean season and thereby moderate the open market prices, specially in the deficit regions.
• The FCI conducts a weekly auction to conduct this scheme in the open market using the platform of commodity exchange NCDEX (National Commodity and Derivatives Exchange Limited).
• The State Governments/ Union Territory Administrations are also allowed to participate in the e-auction, if they require wheat and rice outside the Targeted Public Distribution Scheme (TPDS) and Other Welfare Schemes (OWS).
• The reserve price is fixed by the government. In the tenders floated by the FCI, the bidders can not quote less than the reserve price.
• The present form of OMSS comprises 3 schemes as under:
  • Sale of wheat to bulk consumers/private traders through e-auction.
  • Sale of wheat to bulk consumers/private traders through e-auction by dedicated movement.
  • Sale of Raw Rice Grade ‘A’ to bulk consumers/private traders through e-auction.

Key facts about Food Corporation of India (FCI):

• It is a statutory body set up in 1965 (under the Food Corporation Act, 1964) against the backdrop of major shortage of grains, especially wheat, in the country.
• It comes under the ownership of the Ministry of Consumer Affairs, Food and Public Distribution, Government of India.
• Headquarters: New Delhi
• FCI was mandated with three basic objectives:
  • to provide effective price support to farmers;
  • to procure and supply grains to PDS for distributing subsidized staples to economically vulnerable sections of society; 
  • keep a strategic reserve to stabilize markets for basic foodgrains;

Q1) What is Targeted Public Distribution System (TPDS)?

TPDS is operated under the joint responsibility of the Central and the State/Union Territory (UT) Governments. The Central Government is responsible for procurement, allocation and transportation of foodgrains. The operational responsibilities for allocation and distribution of foodgrains within the States/UTs, identification of eligible beneficiaries, issuance of ration cards to them and supervision over and monitoring of functioning of Fair Price Shops (FPSs) rest with the concerned State/UT Governments.

Source: Centre checks price rise by discontinuing sale of rice, wheat to States under OMSS