The Centre has injected about 1.3 million tonnes of chana into the market in the last 4 months to calm down prices
- IBEF
- November 22, 2023
The Centre is optimistic that it has enough pulses stocks in its warehouse to successfully intervene in the market to lower prices, even as it attempts to restructure the two flagship schemes of price support and price stabilisation fund to ensure better inventory and procurement management.
The Price Stabilisation Fund (PSF) is currently managed by the Consumer Affairs Department, while the Price Support Scheme (PSS) is managed by the Ministry of Agriculture. Both are intended to stabilise the price of important commodities for both farmers and consumers.
The Price Stabilisation Fund (PSF) was established in 2014-15 under the Ministry of Agriculture to help moderate the price volatility of essential agri and horticultural commodities such as onion, potatoes, and pulses. However, the PSF was moved to the Department of Consumer Affairs on April 1st, 2016.
The plan involves the maintenance of a strategic buffer of the aforementioned commodities for subsequent calibrated release in order to reduce price volatility and discourage hoarding and unethical speculation. The initiative encourages direct purchases from farmers at the farm gate or mandi to establish such stock. The Ministry of Agriculture is in charge of running the plan.
Under it, the government, through a central agency, purchases agricultural commodities such as pulses, oilseeds, and copra at the minimum support price to ensure farmers receive a sufficient return. The initiative is being carried out in partnership with state governments.
In September 2018, PSS was incorporated into the larger PM-ASHAA system. PM-ASHAA includes the Price Support Scheme (PSS), the Price Deficiency Payment Scheme, and the Pilot of Private Procurement and Stockist Scheme.
Under the amended PSS, the Central Government's total procurement is limited to 25% of the commodity's actual production for that season. If any state intends to purchase more than 25% but to a maximum of 40% of production through Central agencies, then the quantity will be utilized by the State Government for its PDS and other welfare schemes at its own cost.
However, the Central Government, in an order published in June 2023, eliminated the 40% ceiling for tur, urad, and Masur for the 2023-24 season to allow farmers to grow as much as they want to central agencies without the stress of prices plummeting significantly on the harvest.
According to sources, the PSS and PSF primarily serve to ensure that farmers receive a fair price while also protecting consumers from undue speculation. PSF is being reintroduced within the Agriculture Ministry. The Standing Committee of Parliament also advocated combining the PSF and PSS a few months ago.
Meanwhile, sources claim that the government began the process of pre-registering pulse producers months ago, once the 40% ceiling was lifted.
According to reports, the Centre has injected about 1.3 million tonnes of chana into the market in the last four months, beginning in July, to calm down prices. According to sources, it still has approximately 1.8-1.9 million tonnes of chana out of the entire 3.8 million tonnes of buffer to dispose of in the market to calm down prices as needed.
"We have sufficient gram stocks with us to intervene in the market to cool down prices as and when required", said a senior official.
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.
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