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:

[UPSC Civil Services Exam – 2020 Prelims]

(a) 1, 2 and 4 only

(b) 1, 3 and 4 only

(c) 2 and 3 only

(d) 1, 2, 3 and 4

Answer: (d)        

Explanation:

• Statement 1 is correct. The government’s involvement in trading and setting a minimum support price for rice can lead to the diversion of stocks from the open market, which in turn can drive up prices for consumers.
• Statement 2 is correct. Short-term fluctuations in rice production and prices are influenced by climatic shocks that impact both supply and demand factors.
• Statement 3 is correct. Rice tenders conducted by organizations like the Food Corporation of India and consumer subsidies can help lower prices for the end consumer, making rice more affordable.
• Statement 4 is correct. The government’s stockpiling of rice can be constrained by low stock levels, limiting its ability to mitigate price increases during times of scarcity.