ri   lt re and ood     ana ement       8.21
               2012). The production of potato alone is     Market Sale Scheme (OMSS). This is aimed at
               about 35 MT.                                 serving the following objectives:
         (v) Cold storage facility is available for              (i) to enhance market supply of foodgrains;
               only 10 per cent of fruits and vegetables        (ii) to exercise a moderating influence on
               produced in India (Planning Commission                 open market prices; and
               2011).                                          (iii) to offload surplus stocks.
          To bridge the gap between the requirement              Under the Open Market Sale Scheme
     and availability of scientific storage capacity is     (Domestic), the government now adopts a policy
     the immediate need of the hour. For this, it is        of differential prices to encourage sale of older
     advisable to promote the policies by which private     stock first—sticking to the following policy stance:
     sector investment can be attracted to it.
                                                                 (i) Keeping the reserve price above MSP,
     economic cost of fooDgrAins                                      but reasonably below the acquisition
                                                                      cost or economic cost of wheat, so that
     The economic cost of foodgrains consists of three                the buyers remain attracted to purchase
     components, namely the MSP including central                     of wheat from the mandis during the
     bonus (the price paid to farmers), procurement                   harvest season and the market remains
     incidentals, and the cost of distribution. The                   competitive.
     economic cost for both wheat and rice witnessed
                                                                (ii) Maintaining that the market price during
     significant increase during the last few years due
                                                                      the lean season does not increase much
     to increase in MSPs and proportionate increase
                                                                      and inflation remains under check.
     in incidentals as well as other costs. As per the
     Government, the economic costs of wheat and            Price stAbilisAtion funD
     rice in 2017–18 are estimated to be over Rs. 32
     and Rs. 24 per kg, respectively (they were around      The Government of India, by late March 2015,
     Rs. 20 and Rs 15 in 2010–11).                          launched the Price Stabilisation Fund (PSF) as
                                                            a Central Sector Scheme to support market
          High economic cost necessitated a detailed
                                                            interventions for price control of perishable agri-
     review of the open-ended procurement policy,
                                                            horticultural commodities. The cost to be borne
     especially in states that offer high bonus on top
                                                            between the centre and the states in equal ratio
     of MSP and those that impose high taxes and
                                                            (in case of the North Eastern-states, the respective
     statutory levies, as well as stocking and distribution
                                                            share will be 75:25). The scheme will commence
     policies. In this regard, the government set up a
                                                            with only two crops, viz., onion and potato.
     High Level Committee (HLC) in August 2014
     (Shanta Kumar as its Chairman) to suggest inter-
     alia restructuring or unbundling of the FCI with
                                                               FArm suBsIdIes
     a view to improve its operational efficiency and       Farm subsidies form an integral part of the
     financial management.                                  government’s budget. In the case of developed
                                                            countries, the agricultural or farm subsidies
     oPen mArket sAle scheme                                compose nearly 40 per cent of the total budgetary
     The FCI has been undertaking sale of wheat at          outlay, while in India’s case it is much lower
     pre-determined prices (reserve prices) in the open     (around 7.8 per cent of GDP) and of different
     market from time to time, known as the Open            nature.