11th to 21st January 2024 - Open Market Sale Scheme (Domestic) : Definition & Process

Question 1

What is the Open Market Sale Scheme (Domestic)?

Answer 1

A government program to sell surplus wheat and rice at predetermined prices through e-auction, with the aim of controlling prices and curbing inflation.

Question 2

Who does the government sell wheat to under the OMSS (Domestic)?

Answer 2

Processors, Atta Chalki, and Flour Millers of Wheat Products only.

Question 3

What are the minimum and maximum bid amounts for wheat under the OMSS (Domestic)?

Answer 3

Minimum: 10 MT, Maximum: 100 MT

Question 4

What licenses/registrations must bidders possess to participate in the OMSS (Domestic)?

Answer 4

Valid FSSAI license, GST / Trade Tax Registration, PAN

Question 5

Why does the government implement the OMSS (Domestic)?

Answer 5

To release surplus food grains into the market
To increase supply, which helps moderate prices
To combat inflation, particularly for essential food items

Question 6

Besides traders, who are the other eligible buyers of wheat under OMSS (Domestic)?

Answer 6

Processors, Atta Chalki, and Flour Millers of Wheat Products

Question 7

What is the specific purpose of selling wheat only to processors, Atta Chalki, and flour millers?

Answer 7

To ensure the wheat is used for actual food production and not just resold for profit (which could worsen inflation).

Question 8

How does the FCI (Food Corporation of India) facilitate the OMSS (Domestic)?

Answer 8

They conduct the e-auctions through which the wheat and rice are sold.

Question 9

If a country is experiencing high inflation on bread products, could the OMSS (Domestic) be a potential solution? Explain.

Answer 9

Yes, if the inflation is due to a shortage of wheat. The OMSS could increase wheat supply and bring down the price of raw ingredients for bread production.

Question 10

Besides inflation control, what other potential benefit could come from the OMSS (Domestic)?

Answer 10

Increased food security for lower-income populations.
Support for domestic farmers by ensuring outlets for their surplus grain.

Question 11

Could a private company set up its own version of an Open Market Sale Scheme? Why or why not?

Answer 11

It’s unlikely. OMSS requires large-scale grain reserves and coordination mechanisms that are typically held by government entities.