The Modi government has decided to shake up the rice market game in a strategic move. The tweak involves adjusting the quantity of rice sold under the open market sale scheme (OMSS) through auction. The primary goal is to amp up their availability and keep a check on prices. However, the rice domain faces hurdles in the retail sector, prompting considerations of innovative initiatives.
Quantitative Quandary-Rice Resonates Despite Surplus
Chairman and Managing Director of the Food Corporation of India (FCI) disclosed that the rice surplus stands at a comfortable 2 million tonnes, significantly exceeding the annual demand of 4 million tonnes under all schemes. However, the paradox lies in that rice prices are experiencing double-digit inflation, clocking in at a concerning 13 percent. This economic puzzle has prompted the government to brainstorm solutions to bridge the surplus and market demand gap.
The Challenge in Selling Rice Directly
While FCI is engaging in discussions with cooperatives like Nafed, NCCF, and Kendriya Bhandar to explore the avenue of retail sales, the terrain is trickier for rice than wheat. Unlike wheat, which conveniently transforms into atta, the rice sold in 1-5 kg retail packs would incur a GST burden. This poses a deterrent, especially when retailers prefer bulk purchases of 25 kg without GST, later selling to consumers in loose quantities.
Rice millers emphasize the need to exempt retail packs of rice from GST. They argue that this exemption makes impacting the market dynamics easier. Existing networks of millers, accustomed to bulk purchases, might not align with retail outlet pricing, even if they secure rice at the FCI’s reserve price.
Auction Amelioration – Government’s Adjustments
To boost participation, the government has decided to lower the minimum buying quantity of rice for each bidder from 10 tonnes to 1 tonne in weekly auctions. Simultaneously, the maximum quantity has been increased to 2,000 tonnes, aiming to attract more stakeholders. These strategic adjustments come as only 0.0119 million tonnes of rice have been sold compared to the 4.812 million tonnes of wheat offloaded since June 28.
As the Modi government redefines the dynamics of rice and wheat sales, the blend of strategic adjustments and cooperative collaborations paints a complex canvas. The challenge lies in balancing surplus with economic realities. The grain market is akin to a chessboard, and the government’s moves signal a calculated attempt to navigate it successfully. From surplus to retail, the aromatic journey of rice evolves, leaving consumers and stakeholders alike to anticipate the checkmate in this economic chess game.