Govt may sell 5 MT of foodgrain at cheaper rate to curb prices

Faced with high food inflation, the food ministry is likely to formulate a new scheme to sell five million tonnes of wheat and rice in the open market to keep prices under control this fiscal.

According to sources, the ministry is contemplating to formulate a "prudent OMSS scheme (Open Market Sale Scheme)" for the remaining period of 2010-11 fiscal from July ownwards after taking into account the current stock position and monsoon trends.

Sources said the government's existing OMSS scheme is aimed at helping control food inflation, which is hovering around 16 per cent, and the improved scheme for this fiscal is aimed at achieving more effective results.

In the proposed scheme, the Food Ministry is likely to fix the selling price of wheat and rice lower than the current market price and also below the rates in the ongoing scheme, sources said, adding that the sale process would be eased to make the scheme successful.
    
Under the present scheme, the Centre has allocated wheat and rice to States for sale to retail consumers. It is selling wheat to bulk consumers such as flour millers through tenders.
    
However, the lifting of foodgrains from States have not been encouraging so far. Even in case of bulk consumers for wheat, the Centre had to cut down the price by Rs 200 per quintal to boost the sales under OMSS.
    
On April 1, the government had 42.8 million tonnes in the central pool against the buffer norm of 21.2 million tonnes.
    
The government had allocated two million tonnes of wheat and one million tonnes of rice to States for distribution to retail consumers under OMSS between October 2009 and March 2010.
    
The scheme for wheat was extended till June in non-wheat procuring States, Jammu and Kashmir and Delhi. The scheme for allocation of rice was extended up to June 30 in all States.
    
Besides States, the Centre had allocated 20.81 lakh tonne of wheat for tender sale to bulk consumers for October 2009- March 2010. The scheme has been extended till September 2010 as they have lifted only 1.2 million tonnes of wheat so far.
    
Early this month, an empowered group of ministers on food, headed by the Finance Minister Pranab Mukherjee, had decided to extend the scheme for sale of wheat to both retail and bulk consumers till September.
    
While for retail consumers, the government is offering at minimum support price plus freight from Ludhiana, in case of bulk consumers, it is at acquisition cost plus freight.
    
Wheat MSP stands at Rs 1,100 per quintal, while procurement price for rice is Rs 1,000 per quintal for common variety.