Price Stabilization Fund

The Department of Agriculture & Cooperation has approved the Price Stabilisation Fund (PSF) as a Central Sector Scheme, with a corpus of Rs.500 crores.

Why?

To support market interventions for price control of perishable agri-horticultural commodities during

  1. 2014- 15,
  2. 2015-16
  3. 2016-17.

How it will be used?

  • PSF will be used to advance interest free loan to State Governments/Union Territories and Central agencies to support their working capital and other expenses on procurement and distribution interventions for such commodities.
  • Initially the fund is proposed to be used for onion and potato only .
  • The one time advance to the States/UTs based on their first proposal along with matching funds from the State/UT will form a revolving fund, which can then be used for all future market interventions to control prices of onions and potatoes based on approvals by State level Committee set up explicitly for this purpose.
  • In case of North Eastern States, the State level corpus will comprise of 75% funds from Centre and 25% from the State. While the advance is returnable, the Central Government will share 50% of losses (75% in case of NE states), if any, at the time of settlement of the advance on 31st March, 2017. The Central Government also intends to share the profits, if any, in the same ratio.
  • The States could also request Central Agencies to undertake such operations on their behalf to be supported out of the State corpus. Additionally, the Centre can also request the Central Agencies like SFAC, NAFED, etc. to undertake price control operations for onion and potato.

Fund management:

  • 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.
  • The PSF will be maintained in a Central Corpus Fund account to be opened by Small Farmers Agri-
  • Business Consortium (SFAC), which will act as Fund Manager.
  • 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.

Sources: The Hindu.

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