To keep prices stable and encourage farmers to grow dal crop, the Union Cabinet on Monday decided to more than double the buffer stock of pulses to two million tonnes (mt) from the current 800,000 tonnes, for which it will incur a financial burden of Rs 18,500 crore over two years.
The buffer stock would be created both through direct procurement from farmers and via imports.
The Rs 18,500-crore expenditure on maintaining buffer stock would have to be met either through internal resources or borrowing from markets, given the current allocation towards price stabilisation fund is around Rs 900 crore.
The purchased pulses would then be disbursed through state agencies and select outlets of the central government like Nafed (National Agricultural Cooperative Marketing Federation of India).
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The Centre also moved forward to cap the difference between retail and wholesale price of essential commodities, particularly pulses, by amending the packaged control order.
Though the current Essential Commodities Act empowers states to fix the maximum retail price of any commodity, it has not been found to very effective against packaged food items.
“We want retailers not to take undue margin over wholesale price. We have decided to fix the difference between the two to 10-15 per cent, against the current practice of charging 40-50 per cent margin over wholesale rates,” said a senior consumer ministry official.
“We will sell pulses from the buffer stock, in case of price rise in retail markets,” Food Minister Ramvilas Paswan said, briefing reporters about the Cabinet decision.
Paswan said the stock limit on pulses will not be lifted, while export ban and zero import duty regime will continue.
“We will provide pulses to the poor at cheaper rates. We will not allow prices of essential commodities to rise,” Paswan said, adding the government is keeping a close eye on rates of pulses, wheat and sugar.
Asked about funds for creating the buffer stock, Paswan said: “We have created 300,000 tonnes of buffer stock so far, at an average cost of Rs 92 per kilo. So, it will be Rs 18,500 crore for the two million tonnes.”
“The exercise will ensure a stable price regime for pulses and also encourage domestic farmers to increase production of pulses,” the official statement read.
Pulses output fell to 16.47 mt in 2015-16 crop year, from 17.15 mt in the previous year. Production had remained low in the past two crop years due to drought, resulting in a spike of retail rates.
Retail prices have fallen in the past few weeks and are currently in a range of Rs 115-170 per kilo across major cities.
According to Paswan, prices of pulses increased due to gap of 8.1 mt in demand-supply, as well as hoarding and black marketing.
However, he said production is expected to rise this year to more than 20 mt, on good monsoon and a sharp increase in the minimum support price.
CENTRE’S FINGER ON PULSES
- Assuring that price of essential items will be kept under control, Centre warned it could cap retail prices of pulses using its power under the Essential Commodities Act
- The decision to raise the size of buffer stock to 2 million tonnes (mt) from 800,000 was taken by the Cabinet Committee on Economic Affairs on Monday
- Food Minister Ram Vilas Paswan said Centre will import 1 mt of pulses and procure the remaining from local markets for the buffer stock
- Pulse output fell to 16.47 mt in 2015-16 crop year from 17.15 mt in the previous year
Pulses production (in million tonnes)
Note: The crop year runs from July-June
*Estimated as per the fourth Advanced Estimates
Source: Department of agriculture