UPSC Prelims 2020 Question:

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:

• • Price of rice is affected by the factors which impact the demand and supply of rice in the economy.
  • Government provides Minimum Support Price (MSP) for rice, which not only gives security to farmers for their crop but also affects its market supply. A higher MSP would mean more farmers choosing rice cultivation for security, hence more production and more supply, thus will affect the price in India. So, point 1 is correct.
  • Similarly, Government trading or stockpiling of rice will reduce the availability of rice in the country in the short run and will raise the price in the home country. So, points 2 and 3 are correct.

• Providing consumer subsidy may lead to a rise in demand for rice and will raise its price. So, point 4 is correct.
  
  

Therefore, option (4) is the correct answer.

Subject: Economics | Agriculture