Centre mulling to sell rice directly to consumers through cooperatives

The Indian government on Friday decided to tweak the quantity of wheat and rice sold under the open market sale scheme (OMSS) through auction with the sole objective of increasing their availability and keep prices under check. However, as rice is not getting sold as expected despite high market prices, the Government is considering several initiatives, including selling directly to consumers through cooperatives.

“The availability of rice with the Food Corporation of India (FCI) is highly comfortable, about 200 lakh tonnes (lt) more than the annual demand of about 400 lt under all schemes,” said Ashok Meena, Chairman and Managing Director of FCI. But the inflation in rice is in double-digit — 13 per cent — and definitely a concern for the government, he said.

Hurdles in retail sale move

He said FCI is discussing with cooperatives like Nafed, NCCF and Kendriya Bhandar to see if retail sales could be done. However, unlike in wheat, which is converted to atta, the rice sold by FCI when would be sold in retail packs of 1-5 kg, it would attract GST which is a deterrence as mostly it is bought by retailers in bulk pack of 25 kg without GST and sold to consumers in loose, officials said.

“Unless the government exempts retail packs of rice from GST as a special case for cooperatives below a fixed MRP, it is difficult to make an impact. All millers have their established network and they will not ensure to sell at ₹40/kg at the retail outlet even if they buy at reserve price from FCI,” said a rice miller. The Centre has fixed FCI’s reserve price of rice at ₹29/kg for non-fortified rice and ₹29.75/kg for fortified rice.

Fortified rice

Meena said FCI is clearing the 7 lakh tonnes of non-fortified rice on a priority basis through the open market auction as only fortified rice will have to be distributed by it from April 1, 2024.

He said the Government on Friday decided to reduce the minimum buying quantity of rice for each bidder to 1 tonne from the earlier 10 tonnes as this may help attract more participants in the weekly auction. Similarly, the maximum quantity has been increased to 2,000 tonnes from 1,000 tonnes earlier for each participant. So far, only 1.19 lt of rice has been sold whereas 48.12 lt of wheat offloaded through auctions since June 28.

Wheat limit raised

In case of wheat, the maximum limit has been raised to 250 tonnes per bidder from earlier 200 tonnes for the processors of atta (wheat flour), maida and other products, However, for small atta chakki it has been reduced to 50 tonnes per bidder. Earlier, it was 200 tonnes for both categories of bidders.

Also, the cooperatives Nafed, NCCF and Kendriya Bhandar have been directed to ensure total sales of 1.5 lakh tonnes of atta per month.

In order to increase the availability of wheat and rice in the open market, FCI has been offloading the grains in the market through weekly e-auctions. Current phase of offloading of wheat in the open market started from June 28.

The Centre is selling wheat to these cooperative agencies at ₹21.50/kg for converting into atta and selling to the general public at a price not exceeding ₹275 per 10 kg pack since November. These agencies have so far lifted 86,084 tonnes of wheat, of which54,000 tonnes were sold as atta.

Published Date: December 16, 2023