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According to sources, the Consumer Affairs Ministry's price stabilisation fund (PSF) will be used to make the purchases to provide relief to the distressed farmers who have started dumping their crop as cattle feed since prices are not even covering transport costs in some areas.

A senior official said that although revenue collections have been robust with both GST and direct tax collections showing a sharp increase in the current financial year, there is no plan, as of now, to reduce borrowing.

Since the market is at record highs and valuations are high FIIs are likely to press sales in the coming days. With high bond yields in the US (the 10-year is at 4.28 per cent) and the dollar index above 105, FIIs are likely to sell more, he added.

This trend reversal in FPI investment from buying in the last three months to selling in September is mainly due to the rising US bond yields and the uptrend in the dollar index, he said.

Rising bond yields in the US and strong dollar index are negative for capital flows. This is the primary reason why FPIs have been sellers in the cash market, he said.

In a statement, the commerce ministry said it has directed trade promotion body APEDA not to register contracts below $1,200 per tonne.

FPI selling which began in early August continues. The consolidated NSDL data shows the August FPI investment through 26th at Rs 10,689 crore.

The major headwinds for the markets now come from the rising dollar and bond yields.

Apart from releasing in major markets, onions from the buffer are also being made available to retail consumers at a subsidised rate of Rs 25 per kg through retail outlets and mobile vans of NCCF from Monday (August 21). Retail sale of onion will be suitably enhanced in coming days by involving other agencies and e-commerce platforms.

The announcement was made through a notification on Saturday. This notification shall come into force with immediate effect, and will remain in force up to and inclusive of the December 31, 2023.