A parliamentary panel on Tuesday urged the Department of Consumer Affairs to reduce its reliance on ad hoc funding arrangements for the Price Stabilisation Fund (PSF) and to conduct a thorough assessment of price volatility in agricultural commodities. “Dependence on sale proceeds from procured agricultural goods and transfers from other schemes can lead to delays and unpredictability in responding to market exigencies,” the Standing Committee on Consumer Affairs, Food and Public Distribution said in its report submitted to Parliament.
What is Price Stabilisation Fund (PSF)
Under the PSF, the Department procures agricultural commodities—including pulses and onions—at market prices and releases them in a calibrated manner to discourage hoarding, curb speculative practices, and ensure affordable supplies to consumers.
The panel recommended that the Department take proactive steps to establish a predictable and robust financial framework for the PSF, enabling timely market interventions to protect both producers and consumers from sharp price fluctuations.
“Such assessments are essential to help the Department make informed decisions on annual budget allocations and reduce reliance on ad hoc funding,” the panel said.
All about the PSF operations
According to the report, Rs 5,000 crore—out of the Rs 10,000 crore allocated for 2024–25—was used in the first half of the fiscal year to clear pending payments from past and ongoing PSF operations.
The Department has estimated a tentative requirement of Rs 6,463 crore for FY25, of which Rs 5,000 crore is expected to come from the budget and revised estimates, with the remainder to be met through sale proceeds and the PSF corpus.
In previous years, sale proceeds from PSF operations accrued to the corpus have been used to fund procurement and disposal activities under the scheme.
The panel also emphasised the need for a data-driven assessment of PSF requirements, taking into account factors such as population size, price volatility, and the effectiveness of current stabilisation mechanisms.