NEW DELHI: Seeking to keep prices of perishable farm commodities, especially onion and potato, under control through suitable market interventions, the Centre has set up a ‘Price Stabilization Fund’ (PSF) with a corpus of Rs 500 crore.
The fund will be used to advance interest free loans to state governments 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,” an official statement said.
The fund has been set up as a follow-up of a budget announcement made by finance minister Arun Jaitley on February 28.
Setting up of the PSF assumes significance in light of reports that horticulture commodities, too, took a big hit due to rains and hailstorms across 14 states during February 28-March16.
According to operational details of the fund, the states will set up a “revolving fund” for adequate market interventions. The Centre and state will contribute equally (50:50) for the revolving fund. The ratio of Centre-state contribution to the state level corpus in respect of north-east states will be 75:25.
“The revolving fund is being mooted so that requirements for all future interventions can be decided and met at the state level itself. The central agencies will, however, set up their revolving fund entirely with the advance from the Centre,” the statement said.
“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,” it added.
It also made it clear that the losses incurred, if any, in the operations will be shared by the Centre and the states.
An eight-member price stabilization fund management committee has been set up under the chairmanship of additional secretary in agriculture ministry to manage the fund at the Centre and monitor revolving funds in each state.
National Agricultural Cooperative Marketing Federation (Nafed) and Small Farmers Agri-business Consortium (SFAC) have already put two initial proposals to draw from the price stabilization fund to stock onions to meet requirements during crisis. Onion prices normally rise during September-October and potato prices spurt to abnormally high levels during September and November each year.
