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Source: PIB, Ministry of Consumer Affairs, Food & Public Distribution & Arthapedia
Price Stabilisation Fund (PSF) has gained importance with the volatile price of Onion in the country
What is Price Price Stabilisation Fund?
It refers to any fund constituted for the purpose of containing extreme volatility in prices of selected commodities. The amount in the fund is generally utilized for activities aimed at bringing down/up the high/low prices say, for instance, procurement of such products and distribution of the same as and when required, so that prices remain in a range.
Price Stabilisation Fund (PSF) in India
- The Price Stabilization Fund (PSF) was set up in 2014-15 under the Department of Agriculture, Cooperation & Famers Welfare (DAC&FW) to help regulate the price volatility of important agri-horticultural commodities like onion, potatoes and pulses were also added subsequently.
- Procurement of these commodities will be undertaken directly from farmers or farmers’ organizations at farm gate/mandi and made available at a more reasonable price to the consumers. Losses incurred, if any, in the operations will be shared between the Centre and the States.
- Interest-free loans: PSF Scheme provides for advancing interest-free loans to State Governments/Union Territories (UTs) and Central agencies to support their working capital and other expenses they might incur on procurement and distribution interventions for such commodities. Hence, the actual utilization of the fund depends on the willingness of the state governments/union territories to avail of such loans for these purposes.
- Further, the actual detection of the period when support is required and the deployment of price support measures are left to the states.
- Sharing of the contribution: For this purpose, the States will have to set up a ‘revolving fund’ (a fund which is constantly replenished and not limited by the fiscal year considerations) to which Centre and State will contribute equally (50:50). The ratio of Centre-State contribution to the State level corpus in respect of North-East States will, however, be 75:25. Central Agencies will set up their revolving fund entirely with the advance from the Centre.
- The scheme provides for maintaining a strategic buffer of the aforementioned commodities for subsequent calibrated release to moderate price volatility and discourage hoarding and unscrupulous speculation.
- For building such stock, the scheme promotes direct purchase from farmers/farmers’ association at farm gate/Mandi.
- Apart from domestic procurement from farmers/wholesale mandis, import may also be undertaken with support from the Fund.
- Management of the Fund: The Price Stabilization Fund will be managed centrally by a Price Stabilization Fund Management Committee (PSFMC) which will approve all proposals from State Governments and Central Agencies.
- Maintenance of the corpus Fund: The PSF will be maintained as a Central Corpus Fund by Small Farmers Agribusiness Consortium (SFAC), a society promoted by the Ministry of Agriculture for linking agriculture to private businesses and investments and technology. SFAC will act as Fund Manager.
- Price Stabilization Fund Management Committee (PSFMC): The Fund shall be managed by a “Price Stabilization Fund Management Committee (PSFMC) under the Chairmanship of Secretary (CA)
- The PSF scheme was transferred from DAC&FW to the Department of Consumer Affairs (DOCA) w.e.f. 1st April 2016.