Subject: Economy

Buffer stocks play a crucial role in India's agricultural price stabilization mechanism, acting as a market intervention tool to protect both farmers and consumers from price volatility. The recent allocation of ₹2,11,406 crore for the Department of Food and Public Distribution in 2025-26 underscores the government's commitment to maintaining adequate buffer stocks.

Importance of Buffer Stocks

• Dampening price swings – Government buys cereals at the Minimum Support Price (MSP) after harvest and releases them when supplies tighten, smoothing seasonal and cyclical volatility.

• Curbing food inflation – A one-off release of 5.5 million t of wheat in 2023 helped cool retail prices after the Russia-Ukraine shock.

• Protecting farm incomes – The Food Corporation of India (FCI) purchased more than 100 million t of rice and wheat in 2022-23, shielding 1.5 crore farmers from distress sales.

• Backing the PDS and crisis relief – Stocks secure the monthly 5 kg entitlement for over 800 million National Food Security Act (NFSA) beneficiaries and enabled extra supplies through PM-GKAY during the pandemic.

• Strategic insurance – Reserves can be tapped during droughts, floods or export bans, preventing sudden import dependence.

Storage-related Challenges

The Way Forward

• Fast-track the “World’s Largest Grain Storage Plan” to expand rural silos and cooperative godowns.
• Roll out real-time depot-management systems with bar-coding and IoT sensors for inventory and quality tracking.
• Recalibrate buffer norms periodically, diversify procurement towards pulses and millets, and liquidate excess grain swiftly through open-market sales.
• Promote public–private partnerships and decentralised storage so that grain is held closer to consumption centres, cutting logistics costs and losses.

Effective price stabilisation thus hinges not only on maintaining adequate buffer stocks but also on modern, geographically balanced and fiscally prudent storage management.