Which factors were affecting the price of rice in India in the recent past

Which of the following factors/policies were affecting the price of rice in India in the recent past?

1. Minimum Support Prices
2. Government’s Trading
3. Government’s Stockpiling
4. Consumer subsidies

Select the correct answer using the code given below:

1. 1, 2 and 4 only
2. 1, 3 and 4 only
3. 2 and 3 only
4. 1, 2, 3 and 4

Answer: D

Explanation

By the following ways the price of rice in India gets affected:

• MSP increases the overall price of rice in market as the traders have to buy near MSP value otherwise farmers have the option to sell to government appointed agency at MSP.
• Government also carries out auction of the excess stockpile or intervenes when market prices soar to stabilize them.
• Similarly stockpiling is done to offload the stock when market prices soar providing cheap rice to consumers and stocking when prices fall ensuring remunerative prices to farmers.
• Government also provides subsidised food to poor at Fair price Shops. This reduces the overall demand in the open market and prices are affected.

• Exam Year: 2020