Image for representational purposes only.
| Photo Credit: M. SRINATH
The story so far: Union Minister for Food and Consumer Affairs Pralhad Joshi announced on August 1 that States can directly purchase rice from the Food Corporation of India (FCI) under the Open Market Sale Scheme (Domestic) without participating in the e-auction beginning August 1. Furthermore, Mr. Joshi enumerated that should States want to procure more than 5kg of free grain per individual under the Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY), they can do so at ₹2,800/quintal (excluding transportation cost), instead of the erstwhile ₹2,900/quintal. The Centre will directly offload rice to the States under the scheme. Mr. Joshi also informed that provision of free foodgrains to about 81.35 crore beneficiaries for a period of five years under Pradhan Mantri Garib Kalyan Anna Yojna would continue for five years with effect from January 1, 2024.
What is the procurement paradigm about?
Under the Open Market Sale Scheme (Domestic), the Ministry of Consumer Affairs, Food and Public Distribution sells excess stocks of wheat and rice from the central pool at pre-determined prices through e-auctions. The objective is to “control the price in the market by providing food grains at reduced prices with the aim of curbing inflation”. In 2023, as stated in the Ministry’s year-end review for 2023, 3.04 lakh metric tonne (LMT) of rice had been sold (by the FCI) in the open market through e-auctions. With the revision now, the States would be able to directly procure from the FCI bypassing the requirement to participate in the e-auction. Pertinent to note that here that FCI is the primary instrument of the central government for procurement and distribution of wheat, rice and coarse grains. It is also tasked with maintaining buffer stocks for ensuring food subsidy.
The government informed that the objective of the latest move is to reduce the huge surplus stocks ahead of the procurement after this Kharif season. A communication from the Ministry had earlier informed about current procurement of paddy increasing the central pool rice stock to over 490 LMT. This also accounts for 160 LMT of rice that was yet to be received after milling. Essential to note that the annual requirement for rice is around 400 LMT and the buffer norms prescribed (until July 1) is 135 LMT. “With the current stock level of rice, the country exceeds not only its buffer stock norms but also its entire annual requirement. Besides procurement under the next Kharif Marketing Season (KMS) 2024-25 is also likely to begin in October 2024,” it explained.
About the availability of buffer stocks, erstwhile Minister of State for Consumer Affairs, Food and Public Distribution Sadhvi Niranjan Jyoti had told the lower house in February, that the covered storage capacity available with the FCI and its State agencies for storing foodgrain stock of the central pool was 762.36 LMT against a stored stock of 341.01 LMT. She further explained that requirement for storage capacity in FCI is dependent upon the level of procurement of buffer norms and the operating of the public distribution systems for rice and wheat mainly.
How does this help states?
The revision could potentially be imperative for State governments that are operating their own food distribution schemes, in addition to States which are not rice abundant. In both cases, it is catering to dynamics concerning greater demand. For perspective, as captured from a government response to the Upper House on July 30th, approx. 2.65 lakh metric tonne of rice was sold under the OMSS in 2022-23. Karnataka bought the highest share, followed by Tamil Nadu, Jharkhand, Jammu & Kashmir and Assam.
The move could also mitigate a centre and State tussle over distribution of the essential food item. The paradigm unfolded last year, when in a notification dated June 13, the centre had stopped the sale of rice and wheat from the central pool (under OMSS) to States. A political melee ensued after the newly elected Congress government in Karnataka accused the centre of moving to “scuttle” their ‘Anna Bhagya’ scheme. Among their major poll promises, the scheme promised to provide 10 kg of food grains/rice to every member of a below poverty level (BPL) household and Antyodaya cards every month. The suspension thus left the fate of the scheme in jeopardy. Back then, commenting on the allegations, FCI Chairperson and Managing Director Ashok Kumar Meena had said, “Any State, when they announce any scheme, they do not consult us. They did not consult whether we can supply the food grains or not.”
The Congress-administered State then had to scout for rice at competitive rates from other States, such as Andhra Pradesh, Telangana and Chhattisgarh. To address the ensuing paradigm, the State government decided to temporarily give Rs 170 per month instead of the promised free rice. Referring to the development from last year, General Secretary in-charge Communications of the Congress, Jairam Ramesh recently remarked on ‘X’, “This vendetta-driven decision not only deprived the people of Karnataka of an additional 5 kilograms of rice through the Anna Bhagya Guarantee, but also increased India’s food subsidy bill by tens of thousands of crores.”
