The Government approves the setting up of a Price Stabilization Fund

The Government has approved the setting up of a Price Stabilization Fund (PSF), as a Central Sector Scheme, with a corpus of Rs.500 crores, to support market interventions for price control of perishable agri-horticultural commodities during 2014-15 to 2016-17. Initially the fund is proposed to be used for market interventions for onion and potato only.

PSF Scheme provides for advancing interest free loan to State Governments/Union Territories(UTs) and Central agencies to support their working capital and other expenses on procurement and distribution interventions for such commodities.

The Price Stabilization Fund will be managed centrally by a Price Stabilization Fund Management Committee (PSFMC) which will approve all proposals from State Governments and Central Agencies. The PSF will be maintained as a Central Corpus Fund by Small Farmers Agribusiness Consortium (SFAC), which will act as Fund Manager. Funds from this Central Corpus will be released in two streams, one to the State Governments/UTs as a onetime advance to each State/UT based on its first proposal and the other to the Central Agencies. The Central Corpus Fund has already been established by SFAC in 2014-15.

The one time advance to the States/UTs based on their first proposal along with matching funds from the State/UT will form a State/UT level revolving fund, which can then be used by them for all future market interventions to control prices of onions and potatoes based on approvals by State Level Committee set up explicitly for this purpose. In case of North Eastern States, the State level corpus will comprise of 75% funds from Centre and 25% from the State.

While the advance is returnable, the Central Government will share 50% of losses (75% in case of NE States), if any, at the time of settlement of the advance on 31st March, 2017. The Central Government likewise also intends to share the profits, if any, in the same ratio. The States could also request Central Agencies to undertake such operations on their behalf to be supported out of the State corpus. Additionally, the Centre can also requisition the Central Agencies like Small Farmers' Agri Business Consortium (SFAC), National Agricultural Cooperative Marketing Federation of India (NAFED), etc. to undertake price control operations for onion and potato.

Procurement of these commodities will be undertaken directly from farmers or farmers' organizations at farm gate/mandi and made available at a more reasonable price to the consumers to manage prices of perishable agri-horticultural commodities.

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