Price Stabilisation Fund

July 22, 2023

To address the current surge in tomato prices and ensure affordability for consumers, the government has initiated the procurement of tomatoes through the Price Stabilisation Fund (PSF). These tomatoes are being provided to consumers at significantly subsidized rates.

Establishment and Purpose

The PSF came into existence in the fiscal year 2014-15. Its primary purpose is to absorb and mitigate extreme price fluctuations in essential food commodities and selected goods. This measure helps shield consumers from sudden price surges and provides support to farmers by ensuring a fair price for their produce.

Procurement Process

Under the PSF scheme, the procurement of goods takes place directly from farmers or farmers’ organizations at the farm gate or mandis (marketplaces). By procuring goods directly from the primary producers, the PSF reduces intermediary costs and ensures that the benefits reach the farmers more effectively.

Role of the Price Stabilisation Fund Management Committee (PSFMC)

The PSF is centrally managed by the Price Stabilisation Fund Management Committee (PSFMC). This committee plays a vital role in overseeing the implementation of the fund. It reviews and approves proposals from State Governments and Central Agencies related to the procurement and distribution of commodities.

Interest-Free Loans

The PSF scheme provides interest-free loans to State Governments/Union Territories (UTs) and Central Agencies. These loans are aimed at financing their working capital and other expenses incurred during the procurement and distribution of commodities. This financial support enables them to stabilize prices and ensure that essential goods are available to consumers at affordable rates.

Transfer to the Ministry of Consumer Affairs, Food & Public Distribution

On 1st April 2016, the PSF scheme was transferred from the Ministry of Agriculture & Farmers’ Welfare to the Ministry of Consumer Affairs, Food & Public Distribution. This move aimed to streamline the operations and enhance the effectiveness of the fund in stabilizing commodity prices.

Procurement of Tomatoes under the PSF

Recently, the government initiated the procurement of tomatoes under the PSF scheme to counter the current increase in prices. The National Cooperative Consumers Federation (NCCF) and National Agricultural Cooperative Marketing Federation (NAFED) are actively involved in procuring tomatoes from mandis in Andhra Pradesh, Karnataka, and Maharashtra. These tomatoes are then made available at highly subsidized rates to consumers in major consuming centers across Delhi-NCR, Bihar, Rajasthan, and other regions.

« Previous Post Next Post »