PRICE STABILISATION FUND

Objective: To regulate commodity price Achievement: No stabilisation in the price of commodities

The Price Stabilisation Fund (psf) was approved in 2015 with a corpus of 500 crore. This was done to regulate price volatility of onions and potatoes. Pulses were later added to the list. psf also aims to promote direct purchase from farmers and protect consumers by supplying commodities at reasonable prices. Experts say the basic intent is price stabilisation for consumers and not farmers. As a result, most of the funds have been spent on creating a buffer stock for these commodities.

Agriculture expert Raghav Raghunathan says that government subsidy keeps prices “depressed”, but when prices go up, the stockists and traders make money. For instance, when chana prices went up from 3,000 to 12,000 do you think any farmer sold at 12,000? Only retailers sold at that price, he adds.

Little efforts have been made or funds allocated to create warehouses or godowns linked with village economies that would have protected farmers against price volatility. Little wonder then that farmers across India are throwing away these commodies after a bumper harvest due to crashing prices. Experts say that the Reserve Bank of India’s inflation policy is tilted towards urban consumers. It is keeping the food inflation in check at the cost of the farmer. “A delicate balancing act is needed. The policy should ensure that the poor farmer does not suffer,” says Kanhaiya Singh of the National Council of Applied Economic Research, New Delhi.