CAPF AC 2021 Q82: Indian Economy – Agriculture & Rural Development
- (a) buffer price
- (b) issue price
- (c) minimum support price
- (d) fair sustenance price
Answer: (c) minimum support price
Explanation
Prices in India's food policy
How to think: the clue is before the sowing season and incentive to farmers.
A price announced in advance so that farmers can decide what to sow is the Minimum Support Price (MSP).
| Term | Meaning |
|---|---|
| Minimum Support Price | Pre-announced price at which the government buys from farmers; declared before sowing |
| Issue price | Lower price at which grain is sold to the poor through ration shops |
| Buffer stock | Stock of wheat and rice held by the Food Corporation of India |
| Fair and remunerative price | Price that sugar mills must pay for sugarcane |
Who decides the MSP: the government announces it on the advice of the Commission for Agricultural Costs and Prices (CACP).
The Cabinet Committee on Economic Affairs approves it.
Answer: (c) minimum support price.
Why each option is right or wrong
- (a) Incorrect. There is a buffer stock, not a buffer price.
- (b) Incorrect. The issue price is what consumers pay at fair price shops.
- (c) CORRECT. The minimum support price is declared before sowing to encourage farmers.
- (d) Incorrect. Fair sustenance price is not a term of India's food policy.
Key point
MSP: declared before the sowing season on CACP's advice, approved by the CCEA; covers 22 mandated crops plus FRP for sugarcane. Issue price: price for PDS consumers, lower than the market price.
Remember
MSP: announced before sowing, recommended by CACP.
Common mistakes
- Mixing up the MSP (paid to farmers) with the issue price (paid by consumers).
- Thinking the MSP is announced after the harvest, when procurement happens.
- Confusing the MSP with the fair and remunerative price for sugarcane.
Exam tip
Educated guess: the price is meant to support farmers and is a minimum they are assured of. The name describes the purpose.
Sources
- NCERT Class IX Economics — Chapter 4: Food Security in India (buffer stock, MSP and issue price)
- Commission for Agricultural Costs and Prices, Ministry of Agriculture and Farmers Welfare — price policy reports