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The Open Market Sale Scheme

GS Paper 3

 Syllabus: Issues of PDS, Buffer Stocks and Food Security


Source: TH

 Context: The Food Corporation of India (FCI) has imposed quantity restrictions on states to procure two food grains (wheat and rice) through its Open Market Sale Scheme (OMSS).

The issue related to the OMSS
About OMSS Under the OMSS, the FCI sells (from time to time) surplus food grains (especially wheat and rice) from the central pool in the open market to traders, bulk consumers, and retail chains, at pre-determined prices.
How? Through e-­auctions, where open-market bidders can buy specified quantities.
OMSS and States States are also allowed to procure food grains (over and above what they get from the central pool to distribute to NFSA beneficiaries) through the OMSS without participating in the auctions.
Objective of OMSS Ensure food security by enhancing the supply of food grains during the lean season, control inflation by moderating the open market prices, especially in the deficit regions
Revision of OMSS The Centre decided to restrict the quantity that a single bidder can purchase from 3,000 metric tonnes (MT) to 10­-100 MT.
The objective behind the revision To accommodate more small and marginal buyers, curb retail prices as allowing smaller bids should ideally break monopolies of bulk buyers, allowing more competitive bids by small buyers.
Impact of Revision on States The Centre stopped the sale of rice and wheat from the Central pool under the OMSS to State governments, also disallowing private bidders to sell their OMSS supplies to state governments.
Steps Taken by States Considering alternative methods of obtaining wheat and rice. For example, TN is trying to purchase rice from government agencies other than FCI.
Allegations of States States such as Karnataka (which runs the Anna Bhagya scheme) and Tamil Nadu (which runs the universal PDS) have criticised the government for engaging in “politics” at the expense of marginalised beneficiaries of State welfare schemes.
Centre’s reply Restrictions are imposed to curb inflation and regulate supply. The Centre is already distributing grains to 80 crore marginalised beneficiaries under the NFSA. 



  • It is a statutory body set up setup under the Food Corporation Act 1964, in order to fulfil the following objectives of the Food Policy:
    • Effective price support operations for safeguarding the interests of the farmers.
    • Distribution of food grains throughout the country for a PDS.
    • Maintaining a satisfactory level of operational and buffer stocks of foodgrains to ensure National Food Security.
  • It comes under the Ministry of Consumer Affairs, Food and Public Distribution, Government of India.
  • Since its inception, FCI has contributed significantly to India’s success in transforming its food security system from one that was focused on crisis management to one that is stable.


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What are the reformative steps taken by the Government to make the food grain distribution system more effective? (UPSC 2019)