Tomatoes, a staple in kitchens across the nation, have become increasingly expensive in recent times, burdening consumers and impacting household budgets. To combat this issue and ensure affordability for the general public, the government has taken proactive measures by initiating the procurement of tomatoes through the Price Stabilisation Fund (PSF).
Understanding the Price Stabilisation Fund (PSF)
The Price Stabilisation Fund (PSF) was established during the 2014-15 fiscal year with the primary objective of mitigating extreme volatility in selected commodity prices. Through the PSF, the government intervenes in the market to maintain a balance between demand and supply, especially during times of price fluctuations.
Procurement Process and Subsidized Rates
To make essential commodities like tomatoes affordable for consumers, the government directly procures these goods from farmers or farmers’ organizations at the farm gate or designated mandis (wholesale markets). Subsequently, these commodities are made available to consumers at significantly subsidized rates, effectively reducing the burden of high prices on the general public.
Shared Responsibility
The Price Stabilisation Fund operates on a shared responsibility model between the Central and State governments. Any losses incurred during the procurement and distribution of commodities is shared between these entities. This approach encourages cooperation and coordinated efforts in managing price fluctuations effectively.
Balancing High and Low Prices
The central objective of the PSF is to balance high and low prices of essential commodities. During times of soaring prices, the fund is utilized to acquire the necessary goods, which are then distributed to stabilize the prices and ensure affordability for consumers. Conversely, when prices plummet, the fund can be used to purchase surplus commodities from the market, preventing farmers from suffering financial losses.
Financing Working Capital and Expenses
To ensure a smooth procurement and distribution process, the PSF scheme provides interest-free loans to State Governments/Union Territories and Central Agencies. These loans are utilized to finance their working capital and other expenses incurred during the procurement and distribution of commodities like tomatoes. This financial support streamlines the entire operation and enables timely interventions when required.
Management and Approval
The Price Stabilisation Fund is centrally managed by the Price Stabilisation Fund Management Committee (PSFMC). This committee plays a crucial role in approving proposals put forth by State Governments and Central Agencies. By carefully evaluating and sanctioning these proposals, the PSFMC ensures efficient and targeted interventions to stabilize prices and benefit consumers.
Achieving Market Stability: The Impact
The implementation of the Price Stabilisation Fund has proven to be instrumental in achieving market stability for essential commodities like tomatoes. By preventing drastic price fluctuations, the fund serves as a safety net for consumers and farmers alike. It not only safeguards the interests of the public but also ensures that farmers receive a fair price for their produce.