The Price Stabilisation Fund Scheme (PSFS) is a central government initiative aimed at mitigating price volatility in essential agricultural commodities like onions, potatoes, and pulses. The scheme seeks to protect both consumers from sudden price spikes and farmers from distress sales during price crashes, fostering stability in the agricultural market.
How Does the PSFS Work?
- Corpus Fund: The PSFS is managed as a corpus fund, with contributions from the central government and recoveries from market interventions.
- Market Intervention: When prices rise sharply, the PSFS releases stored commodities to increase supplies and cool down prices.
- Procurement During Surplus: In bumper harvest scenarios leading to price crashes, the PSFS procures from farmers at reasonable prices to prevent distress sales.
- Strategic Buffer Stock: The scheme maintains a buffer stock to ensure timely interventions when needed.
- Central and State Collaboration: Central agencies and state governments work in coordination for effective implementation.
Key Commodities Covered Under PSFS
Initially, the PSFS focused primarily on onions, potatoes, and pulses. The coverage of commodities may be expanded based on prevailing market conditions and necessity.
Impact of the PSFS
- Price Moderation: The PSFS has played a role in taming extreme price volatility in essential food items, benefiting consumers.
- Income Protection for Farmers: Interventions during a sudden price fall have cushioned farmers from potential losses
- Addressing Market Distortions: The scheme acts as a countermeasure against speculative price behaviors.
Success Stories under PSFS
- Stabilizing Onion Prices: PSFS releases from the buffer stock have been used to effectively address periodic onion price spikes.
- Supporting Pulse Farmers: Procurement of pulses under PSFS provided support to farmers during a period of oversupply and falling prices.
FAQs About the PSFS
- Who manages the PSFS? A dedicated Price Stabilization Fund Management Committee (PSFMC) under the Department of Agriculture and Farmers Welfare.
- How does the fund benefit farmers The PSFS provides a market safety net, preventing prices from dropping to unsustainable levels.
MCQs
- The primary goal of the Price Stabilisation Fund Scheme is to:
- A. Promote exports of agricultural goods
- B. Eradicate rural poverty
- C. Reduce volatility in prices of essential commodities
- D. Train farmers in modern agricultural techniques
- Which of these is NOT a mechanism used by the PSFS?
- A. Procurement directly from farmers
- B. Release of stored commodities
- C. Imposing tariffs on food imports
- D. Export subsidies for farmers
Answer Key: 1-C, 2-D
Conclusion
The Price Stabilisation Fund Scheme acts as a crucial tool to manage price uncertainties in the agricultural sector. Balancing the interests of consumers and producers requires proactive price monitoring, timely interventions, and efficient logistical management of the buffer stock. Continued efforts to expand its reach, build robust storage infrastructure, and collaborate effectively with state agencies are essential for the PSFS to make a sustained impact on ensuring stable prices and safeguarding the economic well-being of India’s farmers.