The Budget has allocated ₹10,000 crore to set up a ‘price stabilization fund’ to keep food inflation under check.
Allocations to the Ministry of Consumer Affairs, Food and Public Distribution have seen a bump, from ₹258 crore (under ‘revenue’) in the revised estimates for 2023-24, to ₹10,237 crore for 2024-25. This is because of the price stabilization fund.
“The provision (for the price stabilization fund) is for maintaining buffer stock of pulses, onions and potatoes and making sufficient availability of said commodities in the market so as to cool down the prices as and when required,” says a footnote to the Ministry’s expenditure budget.
The finance minister opened her speech with reference to inflation, noting that India’s inflation “continues to be low, stable and moving towards the 4 per cent target.” She observed that ‘core inflation’ is 3.1 per cent.
What was left unsaid explicitly was that food inflation was rather high, although Ms Sitaraman subtly alluded to the problem when she noted that “steps are being taken to ensure supplies of perishable goods to reach market adequately.”
The Economic Survey 2024-25 has noted that food inflation increased from 6.6 per cent in 2022-23 to 7.5 per cent in 2024-25 and has attributed it to Russia-Ukraine war and domestic weather conditions.
Hence the ‘price stabilization fund’.