Data | Why Centre’s denial of rice through OMSS hits Karnataka the most
Ever since the Congress-led Karnataka government came to power, it has been struggling to meet one of its major pre-poll promises — the provision of five kg of rice to Below Poverty Line (BPL) and Antyodaya card holders. This would have been in addition to the five kg of rice that is provided under the National Food Security Act. To fulfill its promise, the State government required more rice than usual, which led to a slugfest with the BJP-led Centre.
Until 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) had been selling surplus grains. On June 13, the Centre discontinued the sale of grains through OMSS to States to “control inflation”. This put Karnataka, the biggest beneficiary of OMSS, in a fix, forcing it to give cash to beneficiaries instead of the additional rice promised under the Anna Bhagya scheme.
However, the FCI’s supply of rice for ethanol blending has continued to increase. Ethanol blending is a process wherein ethanol is mixed with petrol to reduce the amount of petroleum used. This leads to a decrease in India’s dependence on fuel imports. The amount of rice supplied by the FCI for ethanol blending in 2022-23 was nearly six times more than the quantity of rice that all the States bought through the OMSS scheme.
Under the OMSS, the FCI sells excess rice and wheat to bulk buyers, traders, and States to moderate market prices and to enhance supply during lean seasons. Over 6,800 thousand metric tonnes of rice were sold through the OMSS in the past eight years. Karnataka bought 30% of it — the highest among all States. Chart 1 shows that Karnataka bought over 50% of the rice sold through OMSS in five out of the eight years between FY16 and FY23. The Centre’s discontinuation of the OMSS to States threatens not just the Anna Bhagya scheme, but also the entitlements of over 39 lakh State priority household cardholders who don’t come under the NFSA.
