Which of the following factors/policies were affecting the price of rice in India in the recent past?
1. Minimum Support Price
2. Government’s trading
3. Government’s stockpiling
4. Consumer subsidies
Select the correct answer using the code given below:
Explanation
The domestic equilibrium price of rice in India is heavily influenced by state market interventions and public distribution mechanisms:
– 1. Minimum Support Price (MSP): Establishes an effective price floor in wholesale mandis, prompting private traders to offer competitive rates above or near procurement prices.
– 2. Government’s trading: Export quotas, tariffs, and open-market domestic sales conducted through the Open Market Sale Scheme (OMSS) calibrate domestic supply and stabilize prevailing wholesale prices.
– 3. Government’s stockpiling: Buffer stock accumulation by the Food Corporation of India (FCI) absorbs excess harvest arrivals during peak seasons and releases grain during inflationary intervals.
– 4. Consumer subsidies: Supplying heavily subsidized foodgrains under the National Food Security Act (NFSA) through Targeted Public Distribution Systems reduces open-market consumer demand.
Hence, all four factors influence the price of rice — Option D.