States barred from bidding for food grains held by Centre

The Centre’s decision to exclude states from the auctions follows a move on June 13 to stop all sales to states from federal stocks held by FCI.

The Union government will not allow state governments to bid for federally held food grains when it launches staggered auctions to sell 1.5-million tonne wheat this month and an as-yet undecided quantity of rice in open-market sales, prompting some states to criticise the move.

India’s federally held food stockpile stands at 72.5 million tonne, which includes a large surplus. (Representational Image)

India’s federally held food stockpile stands at 72.5 million tonne, which includes a large surplus. The open-market sale of grains is one among a raft of anti-inflation measures taken by the Centre, including setting limits on how much stock food traders and sellers can store.

The Union government’s decision to exclude states from the auctions follows a move on June 13 to stop all sales to states from federal stocks held by the Food Corporation of India (FCI), the Centre’s main grain-handling arm.

Opposition ruled states, such as Karnataka, have criticised the move. According to a person aware of the matter, the Centre’s new food policy was taken after consultations among various ministries.

An interministerial committee meeting was held on June 8, during which the recommendation to discontinue sale to states was made, the person said. “As there is a need to maintain sufficient stocks for market intervention and control prices of wheat and rice through OMSS, therefore, the sale of wheat and rice under OMSS for state governments may be discontinued,” said the recommendation of the panel headed by the Union home ministry. OMSS stands for open market sales scheme.

The government will distribute free grains to 800 million beneficiaries under the National Food Security Act 2013. “So, the government’s decision to discontinue the sale of wheat and rice under open market sale is aimed at protecting the rest of the consumers from food inflation,” the official added.

However, the committee decided to continue the sale of rice for northeastern states, hilly states and states facing law-and-order situations and natural calamities at an existing rate of ₹3,400 per quintal (100kg).

Karnataka chief minister Siddaramaiah has slammed the Union government, accusing it of preventing the state from supplying grains to the poor. The Karnataka government’s plans to roll out its Anna Bhagya scheme of providing 10kg food grains per person per month to all below-poverty-line families may hit a roadblock after the Centre’s plan.

The central official cited above said the Union food ministry had already imposed restrictions for sale of wheat under “open market sale to states for a quantity up to 10,000 only”, the person said.