Govt to ramp up pulse buffer stock to 20L tn at Rs 18,500 cr

Government today decided to more than double the buffer stock of pulses to 20 lakh tonnes, at an estimated cost of Rs 18,500 crore, to keep prices stable and encourage farmers to grow dal crop.
Assuring that price of essential items will be kept under control, the government warned that it could cap retail prices using its power under the Essential Commodities Act.
The decision to raise the size of buffer stock to 20 lakh tonnes from 8 lakh tonnes was taken by the Cabinet Committee on Economic Affairs (CCEA) today.
Briefing the media, Food Minister Ram Vilas Paswan said the government will import 10 lakh tonnes of pulses and procure the remaining from local markets for the buffer stock.

"We will sell pulses from the buffer stock in case of price rise in retail markets," Paswan told reporters.
Paswan said the stock limit on pulses will not be lifted while export ban and zero import duty regime will continue.

"We will provide pulses to the poor at cheaper rates. We will not allow prices of essential commodities to rise," he said, adding that the government is keeping a close eye on rates of pulses, wheat and sugar.
Paswan said the prices of pulses have started declining and would fall further in the next two months.
Asked about funds for creating the buffer stock, Paswan said: "We have created 3 lakh tonnes of buffer stock so far at an average cost of Rs 92 per kg. So, it will be Rs 18,500 crore for the 20 lakh tonnes."

The minister said there will not be any paucity of funds for creating the buffer stock of pulses. The requisite funds for this operation will be provided through the Price Stabilisation Fund. Funds could be raised from financial institutions as well.
FCI, Nafed and SFAC will undertake domestic procurement operations at the prevailing market price if it is above the minimum support price (MSP) and at MSP, if otherwise.
Import of pulses will be undertaken through government-to-government contract and/or spot purchase from the global market through designated public sector enterprises.
The allocation of pulses from the buffer stock will be made to states and central agencies. Pulses will also be released through open market sales.

"The exercise will ensure a stable price regime for pulses and also encourage domestic farmers to increase production of pulses," the official statement read.
Pulse output fell to 16.47 million tonnes in 2015-16 crop year from 17.15 mt in the previous year. Production had remained low in the past two crop years due to drought, resulting in a spike of retail rates.
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The government might engage a professional agency for management of buffer stock, Paswan said. It is considering engaging an independent agency to get correct information about retail prices across the country.
According to Paswan, prices of pulses increased due to gap of 8.1 million tonnes in demand and supply as well as hoarding and blackmarketing.

However, he said the production is expected to rise this year to more than 20 mt on good monsoon and a sharp increase in the MSP.
Asked about high pulse price in retail markets, Paswan said: "In the next 1-2 months, the situation will be such that farmers will demand procurement of dal at the MSP." In a warning, he even asked hoarders to offload their stocks.
The minister called upon states to lift pulses from the buffer stock and sell at reasonable rates to consumers.
Expressing concern over the wide gap between the wholesale and retail prices, Consumer Affairs Secretary Hem Pande felt that there should be parity between the two and said the government has powers to fix maximum retail price under the Essential Commodities Act.

"If the retail price does not come down, the government may enforce this law," Pande warned.
The secretary said the retail price should not be more than 15 per cent the wholesale rate.
As per the CCEA approval, the specific variety of pulses and their respective quantities for the buffer stock and their phasing/procurement will be decided based on price and availability, both domestic and global.
"Releases from the stock and procurement in subsequent year would be based on the prevailing pulse scenario as well as buffer stock position," the statement added.
A senior food ministry official said substantial quantity of buffer stock will be created from kharif and rabi crops of 2016-17.