Merger conundrum

High PSF provision in the Budget revives buzz about merger with PSS. But PM-AASHA allocation indicates otherwise

- SANJEEB MUKHERJEE

A concern ahead of the Union Budget for 202425 (FY25), presented on July 23, was whether it would have enough to tackle the vexatious issue of food inflation.

Admittedly, inflation management is a combination of several factors, and the Budget is just one of the instruments. However, the annual financial statement of the Union government does indicate how it sees the problem and how it plans to address it.

Within the inflation basket, food has been stubbornly high for year, which has been attributed to low and inadequate monsoon in 2023 followed by weak post-monsoon showers due to El Nino.

Between July 2023 and June 2024, food inflation, as measured by the Consumer Price IndexCombined has hovered in the range of 6.6 to 11.5 per cent.

In the first Budget of the Narendra Modi government's third term in office, Finance Minister Nirmala Sitharaman said steps were being taken to ensure that an adequate supply of perishable goods reached the markets. This year's Budget has allocated ₹10,000 crore under the Price Stabilisation Fund (PSF), which is housed in the Department of Consumer Affairs.

The fund will be used for maintaining a buffer stock of pulses, onions, and potatoes, and for ensuring sufficient availability of these commodities in the market to cool prices when required.

The PSF was first established in FY15 under the Ministry of Agriculture to help regulate price volatility in important agriculture and horticultural commodities such as onion, potato, and pulses. However, from April 1, 2016, the fund was transferred to the Department of Consumer Affairs.