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Price Stabilisation Fund (PSF)

  • 18 Oct 2021
  • 3 min read

Why in News

Recently, the government has said that prices of onion, tomato and potato are cheaper than last year (i.e 2020).

  • Onion buffer has been maintained by the Department of Consumer Affairs under the Price Stabilization Fund (PSF) with the objective of effective market intervention to moderate prices.

Key Points

  • About PSF:
    • Established in 2014-15, PSF is any fund created to absorb extreme volatility in selected commodity prices.
    • Such goods will be procured directly from farmers or farmers' organisations at the farm gate/mandi, and made available to consumers at a more affordable price.
    • Losses sustained, if any, between the Centre and the states must be shared in the operations.
    • The sum in the fund is usually used for activities aimed at bringing down/up the high/low prices say, for example, acquisition of certain goods and distribution of the same as and when appropriate so that costs remain within a range.
  • Provides Loans:
    • The PSF scheme provides for the advancement of interest-free loans to State Governments/Union Territories (UTs) and Central Agencies to finance their working capital and other expenses, which they may incur in the procurement and distribution of such commodities.
    • The PSF scheme was transferred from the Ministry of Agriculture & Farmers’ Welfare to the Ministry of Consumer Affairs, Food & Public Distribution w.e.f. 1st April, 2016.
  • Fund Management:
    • It is centrally managed by a Price Stabilisation Fund Management Committee (PSFMC) that approves all State Government's and Central Agencies' proposals.
  • Maintaining the Corpus Fund:
    • Small Farmers Agribusiness Consortium (SFAC), a society promoted by the Ministry of Agriculture and Farmers’ Welfare for linking agriculture to private enterprises, investment, and technology, maintains the PSF as a central corpus fund.
  • Related Scheme:
    • Launched in 2018 by the Ministry of Food Processing Industries, Operation Green (OG) aims to build value chains of Tomatoes, Onions, and Potatoes (TOP) on the lines ofOperation Flood” (AMUL model) for milk in such a way that will ensure a higher share of consumer’s rupee goes to farmers and stabilizes their prices.
      • While presenting the Union budget 2021, the government announced that Operation Green (OG) will be expanded beyond TOP to 22 perishable commodities.

Source: PIB

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