Image has been used for representational purpose. Photo Credit: Nagra Gopal
Ever since the Congress-led Karnataka government came to power, it has been struggling to fulfill one of its major pre-poll promises – Provision of five kg rice to Below Poverty Line (BPL) and Antyodaya card holders, This would have been in addition to the five kilos of rice provided under the National Food Security Act. To fulfill its promise, the state government required more rice than usual, leading to a clash with the BJP-led Centre.
Till now, a major source of rice for Karnataka was the Centre’s Open Market Sale Scheme (OMSS). Through OMSS, the Food Corporation of India (FCI) was selling surplus food grains. on June 13 Center stops sale of food grains through OMSS States to “control inflation”. This has left Karnataka, the biggest beneficiary of OMSS, in trouble. It is being forced to give cash to the beneficiaries Additional rice was promised under the Anna Bhagya scheme.
However, FCI’s supply of rice for ethanol blending continues to increase. Ethanol blending is a process in which ethanol is mixed with petrol to reduce the amount of petroleum used. This reduces India’s dependence on fuel imports. The quantity of rice supplied by FCI for ethanol blending in 2022-23 was almost six times more than the quantity of rice procured by all the states through the OMSS scheme.
Under OMSS, FCI sells excess rice and wheat to bulk buyers, traders and states to control market prices and augment supplies during lean seasons. Over 6,800 thousand metric tonnes of rice has been sold through OMSS in the last eight years. Karnataka bought 30% of it – the highest among all states. chart 1 Turns out that in five of the eight years between FY16 and FY23, Karnataka procured more than 50% of the rice sold through OMSS. The Centre’s closure of OMSS to states not only threatens the Anna Bhagya scheme, but also threatens the rights of over 39 lakh state priority household cardholders who are not covered under NFSA.
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Many states which run Extended Public Distribution System (above NFSA norms) depend on OMSS to meet the additional requirement. chart 2 Shows beneficiaries covered under NFSA and those covered under state-run schemes.
Karnataka Chief Minister Siddaramaiah tweeted that the FCI had responded to the state’s request for rice at ₹3,400 per quintal through a letter dated June 12, just a day before the OMSS scheme was closed. In fact, past trends show that the state has been the largest buyer of rice sold under OMSS (chart 3,
The Center has said that the scheme was limited to curbing inflation. “The Government of India is already providing food grains for 80 crore people. Along with this, 60 crore consumers will also have to be taken care of. OMSS will be done in the interest of those 60 crore people so that inflation remains under control,” said Ashok KK Meena, chairman and managing director, FCI, explaining the Centre’s decision to restrict the supply of food grains through OMSS (domestic) Said. 100 MT. chart 4 It is learned that the retail inflation of rice has been in double digits for the last eight months.
As mentioned earlier, the supply of rice from FCI for ethanol blending has not been affected by this decision. As per FCI’s 2023 policy, the reserve price of rice for ethanol production was ₹20/kg, which is much lower than ₹34/kg sold to states under OMSS. In the last two years, there has been a huge increase in rice supplied for ethanol blending (chart 5, From 5,500 MT in April 2021, the supply of rice increased to over 2,50,000 MT in May 2023.
nihalani.j@thehindu.co.in
Source: Food Corporation of India, Food and Civil Supplies Department of States
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