States asked to set up PSFs to combat price volatility

New Delhi: The Centre has asked states to set up their own state-level price stabilisation funds (PSFs) to deal with price volatility of important agri-horticultural commodities such as onion, potato and pulses. It will provide financial assistance for such funds, which can be used for maintaining buffer stocks of price sensitive commodities by buying directly from farmers.

“The funds may be used for import also to moderate price volatility. The recent spike in onion prices has increased the need for such funds at state level also to contain prices during shortage of a commodity,” said a senior consumer affairs ministry official, who did not wish to be identified. The Centre had set up a PSF in 2014-15 which is being utilised primarily for building buffer stocks of pulses and onion, and funding state agencies for the domestic purchase and import of commodities.

“We have also given financial assistance to state governments such as those of West Bengal, Andhra Pradesh and Telangana for setting state level PSFs,” said the official. Andhra Pradesh recently announced a minimum support price (MSP) for red chillies, turmeric, onion and minor millets for the state farmers. These crops are not included in the 22 crops for which the central government announces MSP every year.


“The MSP will be funded by the state PSF. Andhra Pradesh has set up a PSF of Rs 3,000 crore. The money will be utilised to protect farmers’ commercial interest. Other states should also follow this model,” said the official.