Price Stabilization Fund - a definitive stride towards tackling food inflation

ASSOCHAM welcomes the proposed roll out of Price Stabilization Fund towards addressing seasonal price fluctuation of key perishable and non-perishable commodities. The Chamber feels that this will be another concrete move in a series of measures undertaken by the Government to tackle stubborn food inflation, distribution issues of food articles and also protect both farmers and consumers from abnormal price volatility.

The fund, being proposed as a bridge support, will meet the difference between purchase costs and selling prices coupled with distribution support and sale of sensitive commodities by State Governments. The fund is expected to be operational between Jul 15 to Nov 15, when prices of vegetables and pulses show huge volatility. This will complement the amendment to the Essential Commodities Act as well as the measures to create a unified national market to deal with persistent food inflation. ASSOCHAM is confident about the following multiple positive externalities arising from the move:

The fund will make market interventions, when prices of some commodities rise above the defined price threshold, thereby reducing hardship for consumers who are impacted the most by price spikes in food articles like vegetables and pulses.

The move will enable farmers to plan production as per demand in a more sustainable manner and make the agri-market more resilient.

Market interventions by the Govt., especially in perishable goods, will provide a fillip to distribution and storage infrastructure.

ASSOCHAM believes that the complementary measures, if implemented in the right spirit by Centre and State Governments, will enable the country to successfully limit food inflation, leading to lowering credit costs in the medium term. A robust institutional mechanism for coordinated policy implementation will further boost the agricultural sector in India.

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