Price Stabilization Fund

Price Stabilisation Fund (PSF) refers to any fund constituted for the purpose of containing extreme volatility in prices of selected commodities.

PSF was Commenced in Year 2014-2015

Objectives/ Aims : 

To support procurement/distribution interventions of States and State/Central agencies to regulate price volatility of agricultural and horticultural commodities both when there is price rise or Price Crash OR Fall.

Salient Features :-

i. PSF is for current plan. However, it could be extended to future Plan periods as well.

ii. A Corpus Fund of Rs.500 crores to be established to provide advances for working capital and other expenses at zero rate of interest to State Govts/ State Agencies/ Central agencies for procurement and distribution of perishables agricultural and horticultural commodities.

iii. The fund to initially support procurement/distribution interventions for highly volatile commodities onion and potato only.

iv. The fund to support interventions in two situations viz.

(A) Procurement interventions for perishable agri-horticultural commodities when prices crash and farmers need to be protected.

(B) Alternatively, when prices are anticipated to increase substantially, then procurement of these commodities could be undertaken from farm gate/mandi to reduce the cost of intermediation and make them available at a cheaper price to the consumers OR Consumer Protection.

So , PSF Motive is to Protect Farmers as well as Consumer Protection due to volatile Market Conditions/ hoarding /Black Marketing etc .

v. In case of losses incurred by the agencies, the losses to be borne on the fund to the extent of 100% losses in case of Central Govt. agencies ; 50% losses in case of State Govts/ State Govt agencies and 75% losses in case of North Eastern States/State agencies.

vi. There will like-wise be a profit sharing mechanism between the Fund and the implementing organisations. In case of profits accrued by the organizations, the profits will be ploughed back into the Fund to the extent of 100% profits in case of Central Govt. agencies ; 50% profits in case of State Govts/ State Govt agencies and 75% profits in case of North Eastern States/State agencies. Some minimum incentive may, however, be given to the Central agencies in case of profits.

vii. Small Farmers Agribusiness Consortium (SFAC) has been designated as the Fund Manager through whom the funds will be channelized to the implementing agencies.

Structure of PSF :-

The fund will be managed by Price Stabilization Fund Management Committee (PSFMC) headed by Secretary (A & C) and consisting of 7 other Ex-officio members viz. (i) Additional Secretary (In charge of Marketing), (ii) AS&FA (iii) Joint Secretary (Consumer Affairs) (iv) Joint Secretary (Crops), (v) Joint Secretary (Horticulture) , (vi) Joint Secretary (Cooperation) and (vii) Joint Secretary (Marketing) as Member Secretary. Funding Pattern including subsidy, if any, (component-wise) - 100% Central Funding