Lok Sabha Question No. 2938 (UNSTARRED), answered on 2019-07-10
Subject: Price Stabilisation Fund
Ministry: COMMERCE AND INDUSTRY
Asked by: Devusinh Jesingbhai Chauhan

## GOVERNMENT OF INDIA MINISTRY OF COMMERCE & INDUSTRY (DEPARTMENT OF COMMERCE)

## LOK SABHA UNSTARRED QUESTION NO. 2938 TO BE ANSWERED ON 10 th JULY, 2019

## PRICE STABILISATION FUND

## 2938. SHRI DEVUSINH JESINGBHAI CHAUHAN:

Will the Minister of COMMERCE & INDUSTRY ( वािण�य एवं उ�ोग मं�ी ) be pleased to state:

- (a) the  objectives  and  salient  features  of  the  Price  Stabilisation  Fund  (PSF) scheme for the plantation crops indicating the commodities and the facilities which are being extended thereunder;
- (b) the funds allocated and utilised under the said scheme during each of the last three years and the current year;
- (c) whether the Government has established/proposes to establish any PSF for mitigating the price volatility  in agricultural produces and if so, the details thereof;
- (d) whether  the  Government  has  reviewed  the  said  scheme  and  proposes  to modify it;
- (e) if so, the details and present status thereof indicating the proposed changes; and
- (f) the time by which the modified scheme is likely to be finalised?

## ANSWER

okf.kT; ,oa m|ksx ea=h ( Jh ih;w'k xks;y )

## THE MINISTER OF  COMMERCE AND INDUSTRY (SHRI PIYUSH GOYAL)

(a)  &  (b) In  view  of  the  fluctuating  nature  of  international  prices  in  plantation  crops  and  the dependence of growers on the export markets, Government launched and implemented the Price Stabilization Fund (PSF) Scheme from 1 st April, 2003 to 30 th September, 2013 to provide financial relief to small growers of coffee, tea, rubber and tobacco having land holdings up to four hectares.

This financial relief was provided when prices of these commodities fell below the price spectrum band. Every year, a uniform price spectrum band for all four commodities was announced by the High Powered Committee (HPC) constituted by the Department of Commerce with a range of + 20 % to - 20 % of moving average of the previous seven years international prices of the crops. The scheme was based on the principle of contributions from the growers and the Government depending on normal/boom/distress periods, with a provision for withdrawal by the growers during the distress period.  The Price Stabilization Fund Trust (PSFT) was set up by the Department of Commerce and NABARD to implement the PSF Scheme.  The grower members were required to deposit Rs. 500 (non-refundable) towards entry fee, which would form part of the PSF Corpus. If the price falls within the band, the year would be declared as normal year and growers as well as PSFT would deposit Rs. 500 each in the PSF saving account of grower opened for the purpose of the scheme in the Nationalized banks. If the price goes above the upper band, the year would be declared as boom year and only the grower would deposit Rs. 1000 in the account and if the price falls below lower band, the year would be declared as distress year and only PSFT would deposit Rs. 1000 in the growers'  accounts. In distress year, each eligible grower was allowed to withdraw Rs.1000 from the respective account. The scheme was closed on 30/9/2013. Therefore, no fund was allocated and utilized under the scheme during the last three years.

(c) A corpus fund was set up in the year 2003 with the Government of India's contribution of Rs. 432.88 crore and growers' contribution of Rs. 2.67 crore (Total Rs. 435.55 crore) to implement the  PSF scheme. The PSFT, set up in September, 2003 for a period of ten years was implementing the PSF scheme   and operating the PSF Corpus Fund.  As per the provisions of the scheme, interest earned on the Corpus was utilized for implementing the scheme, keeping the corpus fund vested in the Public Account of Government of India intact. The PSF Trust has been re-registered for a period of  10  years  commencing  from  11/9/2013. As  per the  guidelines  of  the  PSF,  interest is calculated at the end of each financial year and transferred to the Reserve Fund -PSFT.

(d) to (f) The PSF scheme was not successful.  The scheme was reviewed in October, 2012 with a view  to  rectify  the  deficiencies  in  the  scheme. As  a  result, a  draft  modified  PSF  Scheme  was prepared and discussed in the meeting held on 4/6/2014 under the chairmanship of Expenditure Secretary .  In the meeting, it was decided that   the available corpus with the Price Stabilization Fund Trust may be utilized by the Department of Commerce to implement a modified insurance premium subvention scheme for insuring the growers.  Accordingly , the Department of Commerce approved a pilot scheme in the name of Revenue Insurance Scheme for Plantation Crops (RISPC) to protect small growers of tea, coffee, rubber & cardamom from the twin risks of weather and prices for implementing in nine districts of seven States by the commodity boards through selected insurance companies. However, the scheme did not elicit desired response from the target groups and insurance companies.

The  Indian  Institute  of  Plantation  Management Bengaluru  evaluated  the  scheme  and recommended crop specific insurance schemes for Coffee, Tea, Cardamom and Tobacco so that the  needs  of  each  crop  could  be  met. The commodity boards have been advised to formulate suitable schemes as recommended by the evaluation study .   The finalization and approval of the modified scheme is dependent upon the submission of suitable schemes addressing the deficiencies of the earlier scheme.