UPSC Prelims 2020 · Question 73 of 100
UPSC Prelims 2020 question on Rice Price Factors
- ExamUPSC CSE
- Year2020
- PaperGeneral Studies Paper I
- SubjectIndian Economy
- TopicAgriculture Economy
- DifficultyHard
- TypeStatement
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:
Show answer
Answer: D. 1, 2, 3 and 4
Verdict
All four factors/policies have affected the price of rice in the country → Option (d).
Statement by statement
Option 1 – CORRECT: MSP results in a diversion of stocks from the open market, thus driving up the price for the ultimate consumers. Further, MSP prevents the prices from going down (directly). The farmer can sell the produce to the government at the MSP. It will also prevent the price from going up (indirectly) — the price will shoot up only when the production is less. Hence option 1 is correct.
Option 2 – CORRECT: Government's trading results in an increased demand in the international markets, which affects the price of rice in India. Trading by government affects prices. Hence option 2 is correct.
Option 3 – CORRECT: Low stock levels constrain the ability to buffer the price rise resulting from other factors. Government's stockpiling affects price stability. Hence option 3 is correct.
Option 4 – CORRECT: Subsidies lower the prices for the ultimate consumer. Consumer subsidies directly affect the effective price of rice for consumers. Hence option 4 is correct.