Price Stabilization Fund PSF is a central sector scheme under the Department of Agriculture & Cooperation, Ministry of Agriculture, with a corpus of Rs 500 crore to provide an interest-free advance to state governments, union territories(UTs), and Central agencies to support their working capital and other expenses they might incur on procurement and distribution interventions for perishable agri- horticulture commodities.
This was done in response to the price volatility of agricultural produce which was detrimental to both farmers and consumers. It will support market interventions for price control of perishable agri-horticultural commodities by promoting direct purchase from farmers or farmers associations at farm Mandis and maintaining a strategic buffer stock to discourage hoarding and unethical speculation. It also aims at protecting consumers by supplying these commodities at reasonable prices by undertaking calibrated release of agricultural stock.
Price Stabilization Fund will advance interest-free loans to state governments, union territories (UTs ), and Central agencies to support the working capital and other expenses incurred on procurement and distribution. This will be based on the proposal of the state or UT with matching funds from the PSF. For Northeastern states, the state Corpus will comprise 75% funds from the center and 25% from the state, and for other states, it will be a 50:50 contribution from the center and state. The fund is released into a revolving fund account set up for the same purpose by the state government or UT.
The Central government will share 50% of losses, ( 75% for the North East States) and the Central Government also intends to share the profits in the same ratio. State governments can also request Central agencies to undertake operations that are supported by the state Corpus.
The central government can also request Central agencies like NAFED, SFAC to undertake price control operations for onion and potato. The commodities are to be procured directly from farmers or farmers’ organizations at the farm gate or Mandis and will be made available at more reasonable prices to the consumers.
This scheme focuses on empowering both the farmers and consumers farmers by buying their produce at reasonable prices and consumers by selling these commodities at reasonable prices. Initially, the fund was going to cover onion and potato only, and later pulses were also added.
Due to rising oil prices, the government is also considering PSF in the oil sector to control the price of auto fuels like petrol and diesel.PSF will be managed centrally by the PSF Management Committee (PSFMC ) which will approve all proposals from state governments and Central agencies.
The PSF is going to be maintained in a central Corpus fund account which is to be opened by the Small Farmers Agribusiness Consortium (SFAC) which will act as the Fund Manager. SFAC is a society promoted by the Ministry of Agriculture for linking agriculture to private enterprises, investment, and technology.
Many such agricultural schemes have been introduced by the government like Credit Facility for farmers, Interest Subvention for Dairy Sector, National mission on Edible Oils, Pradhan Mantri Kisan Samman Nidhi, Pradhan Mantri Krishi Sinchai Yojana, and encouraging rural habitats.