PSFS; MSP for Horticultural produce

Price Stabilisation Fund Scheme

The Department of Agriculture and Cooperation (DAC) under the Union Ministry of Agriculture on 26 March 2015 approved the creation of Price Stabilisation Fund (PSF) as a Centrally Sponsored Scheme (CSS).

The purpose of the scheme is to provide interest free advances towards working capital to the government agencies which are involved in procurement and distribution of perishable agri-horticultural commodities. 

The hassle-free flow of funds will enable the agencies to regulate volatile prices of commodities in an effective manner.

Objectives of PSF Scheme

•    To promote direct purchase by the government agencies from farmers or farmers’ associations at farm gate. 

•    To maintain a strategic buffer stock that would discourage hoarding and unscrupulous speculation.  

•    To protect consumers by supplying such commodities at reasonable prices through calibrated release of stock.

Main Highlights of the Scheme

•    The scheme envisages creation of a 500 crore rupees corpus fund with the name Corpus Fund for Procurement and Distribution of Identified agri-horticulture commodities. 

•    To operationalise the fund a savings account Corpus Fund for Procurement and Distribution of perishable agri-horticulture commodities will be opened by the Small Farmers Agri-Business Consortium (SFAC) in a nationalized bank with flexi-deposit facility. The amount made available by the government will be kept in this account.

•    The SFAC will act as the fund manager and will maintain an account of receipts and expenditure from the corpus fund and report to the Member-Secretary, Price Stabilisation Fund Management Committee (PSFMC).

•    The funds from the Corpus Fund would be provided in two streams, viz., Stream A and Stream B. Stream A account is for State government whereas Stream B account is for Central Government agencies.

•    Under Stream A, States would be given as a onetime interest free advance which will only be released into a revolving fund account set up for the purpose by the State. The contribution to the state level fund by the Central Government and State Governments would be in the ratio 50:50 but for North-East States, the contribution ratio would be 75:25. 

•    Under Stream B, the funds from the Corpus fund would be provided to Central Government agencies as an interest free advance based on their proposal for market intervention for price control. This will be set up as a revolving fund.

•    The proposal from the state agencies should be approved by a state level committee formed at the state level akin to the PSFMC by the respective state governments.

•    Advances received cannot be utilized for any other purpose by the recipient agency, viz., Central Agencies and State Governments.

•    Losses incurred, if any, by the Central Government agencies during the operation of the scheme will be met from Central Corpus fund. 

•    Losses incurred by the States during the operation of the scheme will be shared between the Centre and the States in the ratio 50:50. 

•    In case of North-East States, the losses incurred by these states will be shared between Centre and these states in the ration 75:50.

•    At the time of closure of accounts, profits earned on interventions will be ploughed back into the Central Corpus Fund to extent of 100 percent in case of Central Government agencies and 50 percent in case of State Government.

•    Under the fund, the government agencies will procure notified agri-horticultural commodities directly from farmers or farmers’ organizations at farm gate. 

•    The commodities will be made available at a more reasonable price to the consumers when the prices are not affordable.

•    Initially the fund is proposed to be used for onion and potato only. 

•    The fund will be implemented during 2015-16 and 2016-17. The Fund may be allowed to roll on to future years also.

•    The accounts will be audited by the Comptroller and Auditor General of India.

•    The scheme envisages the creation of Price Stabilisation Fund Management Committee (PSFMC). 

Price Stabilisation Fund Management Committee (PSFMC) 

The PSFMC is the administrative agency responsible for implementing the scheme. 

Objectives of the PSFMC:

•    PSFMC will invite, appraise, approve proposals received from state governments and central agencies. PSFMC will approve the amount of advance.

•    PSFMC will take decisions regarding investing surplus available in the Central Corpus Fund in other bank instruments like fixed deposits, etc for better returns. While doing so, itwill be guided by extant guidelines on this subject.

•    PSFMC will monitor the progress of implementation of the Price Stabilization Operations by the implementing agency. PSFMC will advise suitable measures and corrective actions, if any, during the course of implementation, keeping in view the overall aim and objectives of the scheme

•    PSFMC will meet regularly to review the wholesale and retail prices of essential agri-horticulture

•    Commodities and will guide or propose required interventions.

The PSFMC will be headed by the Secretary to the Department of Agriculture and Cooperation and includes additional secretaries and joint secretaries from the department as members. Joint Secretary, DAC (Marketing) would be the Member-Secretary.