School of Economics | The Price Stabilization Fund (PSF) in India
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The Price Stabilization Fund (PSF) in India

The Price Stabilization Fund (PSF) was set up in 2014-15 under the Department of Agriculture, Cooperation & Famers Welfare (DAC&FW) to help regulate the price volatility of important agri-horticultural commodities like onion, potatoes, tomatoes, pulses etc. The PSF scheme was transferred from DAC&FW to the Department of Consumer Affairs under Ministry of Consumer Affairs, Food and Public Distribution w.e.f. 1st April, 2016.

The scheme provides for maintaining a strategic buffer of aforementioned commodities for subsequent calibrated release to moderate price volatility and discourage hoarding and unscrupulous speculation. For building such stock, the scheme promotes direct purchase from farmers/farmers’ association at farm gate/Mandi. The PSF is utilized for granting interest free advance of working capital to Central Agencies like NAFED (National Agricultural Cooperative Marketing Federation of India Ltd.) and SFAC (Small Farmers Agri-business Consortium), State/UT Governments/Agencies to undertake market intervention operations. Apart from domestic procurement from farmers/wholesale mandis, import may also be undertaken with support from the Fund.

Now, when the tomato prices have skyrocketed, NAFED and other agencies are releasing the tomato stock at a regulated price.

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