In signs that the government's efforts to create a buffer stock of pulses to control rising prices are not in tune with market realities, prices of pulses continued to spurt, reaching Rs200 per kg in major markets like Mumbai and Delhi.
The government today announced plans to increase the buffer stock by over five times to 8 lakh tonnes for retail sale at a subsidised rate of Rs120 per kg. But that will still leave a market big enough for pulses to be sold at even higher prices as the government sales at the most will only cover small urban pockets and the PDS network.
"In a significant decision, the government has decided to enhance the buffer stock of pulses from 1.5 lakh tonnes to 8 lakh tonnes," the food ministry said in a release issued late last night.
The problem with the buffer stock is that there is no efficient distribution mechanism that could influence prices. Also, not many states have evinced interest in lifting pulses for retail distribution at a cheaper rate.
As things stand, it seems unlikely that procuring more pulses for the buffer stock would help in curbing price rise at a time when the distribution system is clogged.
As per the data available with the consumer affairs ministry, maximum ruling retail price of urad is ruling at Rs196 per kg (Rs200 in Mumbai), tur at Rs166 per kg (Rs180 in Mumbai), moong at Rs120 per kg (Rs160 in Mumbai), Masoor at Rs105 per kg and gram at Rs93 per kg today.
Meanwhile, procurement of Rabi pulses has reached 64,000 tonnes as of 13 June 2016. Together with earlier procurement of 51,000 tonnes of Kharif crop, total domestic procurement of pulses by government agencies has reached 1,15,000 tonnes.
The government has also ordered further import of 12,500 tonnes of pulses for buffer stocks, which include 10,000 tonnes of masur and 2,500 tonnes of urad. So far 14,321 tonnes of pulses have been imported by government agencies against the total contracted quantity of 38,500 tonnes.
The buffer stock is being created by procuring pulses directly from farmers at market prices using the Price Stabilisation Fund as well as through imports in order to address the deficit of 7.6 million tonnes of pulses. The stock is being released to states for retail distribution at a subsidised rate of Rs120 per kg.
Though the centre is pressing states to take un-milled pulses from the buffer stock at Rs66 per kg and process it and sell in retail markets at Rs120 per kg, not many states have shown interest.
So far, over 10,000 tonnes has been released to states like Andhra Pradesh, Telangana and Tamil Nadu for retail distribution even as food minister Ram Vilas Paswan has been saying that the states too have equal responsibility in controlling prices and should take effective steps.
Production of pulses is estimated to have declined to 17.06 million tonnes in 2015-16 crop year (July-June) due to two consecutive years of drought, while the demand for it stands at 23.5 million tonnes.