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.