Budget 2024: Increased outlay of Rs 10,000 cr win-win for farmers & consumers

The record budget allocation of ₹10,000 crore for price stabilisation will be used to augment procurement of pulses, onions and other essential food items by the Department of Consumer Affairs for keeping a check on food prices, while the agriculture ministry will also tap the fund for enhancing cultivation and reducing post-harvest losses of these commodities, said a senior government official. A token amount of ₹1 lakh was set aside for the purpose in the FY24 budget.

The higher allocation is also due to merging of two existing funds - price stabilisation fund (PSF) meant for controlling price volatility for the benefit of consumers, and price support scheme (PSS) for procurement from farmers when prices fall below the minimum support price (MSP), the official said.

The merged fund will be used for the benefit of farmers as well as consumers, said the official cited above.

Food inflation rose from 3.8% in FY22 to 6.6% in FY23, and further to 7.5% in FY24 due to higher prices of pulses, vegetables (onion, tomato, potato) and cereals, causing worry for the government which had to face voter flak during the general election earlier this year.

In June, Reserve Bank of India governor Shaktikanta Das had said there is a need for close monitoring of food price uncertainties and their potential spillover effects on headline inflation.

PULSES

The government is anticipating an increase in procurement of three major pulses - tur, masoor and urad this year, which will require a larger budgetary allocation. It will also continue to sell pulses such as masoor and moong under the Bharat brand.

"We procure pulses as they are available in the market. For instance, we bought summer moong beyond our target this time," the official said. The government intends to have a buffer of 3.2 million metric tonnes for the three major pulses.

Earlier, cooperation minister Amit Shah had urged farmers to cultivate pulses on a large scale, promising them unlimited procurement at either MSP or market price, whichever is higher.

The Centre has resolved to make India self-sufficient in production of pulses by 2027.

MERGING PSS, PSF

PSS, which is implemented by the agriculture ministry, is operationalised only when prices of farm produce fall below MSP. In the case of PSF, which is under the food and consumer affairs ministry, the fund is used for procuring commodities at market prices and releasing it to consumers when prices are volatile.