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GS Economy Questions for IAS Prelims Exam - Agriculture III

Oct 10, 2016 17:49 IST

    From UPSC IAS Examination point of view, the Questions based on Indian Economy are very important. The UPSC IAS Exam aspirants must be aware of the every perspective of Indian Economy either it is historical perspective or current perspective.

    1.    Consider the following statements regarding the Minimum Support Price policy of Indian Government:
    I.    The Government of India started announcing the Minimum Support Prices (MSP) in 1966–67 for wheat which was expanded to cover many more crops in the coming years in the wake of the Green Revolution.
    II.    It is a minimum price at which the government will purchase farmers’ crops—whatever may be the market price for the crops.

    Which of the following statement(s) is/are correct?
    a.    Only I
    b.    Only II
    c.    Both I and II
    d.    Neither I nor II

    Answer: c

    Explanation:


    The Government of India started announcing the Minimum Support Prices (MSP) in 1966–67 for wheat which was expanded to cover many more crops in the coming years in the wake of the Green Revolution which might have resulted into fall in prices of wheat depleting farmers’ profit. It is a minimum price at which the government will purchase farmers’ crops—whatever may be the market price for the crops.

    Recently, the Cabinet Committee on Economic Affairs has given its approval for the increase in the Minimum Support Prices (MSPs) for all Kharif Crops of 2016-17 Seasons. Further, to incentivise cultivation of pulses and oilseeds, in the country Government has announced a bonus on these crops, payable over and above the approved MSP.

    The decision to increase MSPs is based on the recommendations of Commission for Agricultural Costs and Prices (CACP) which takes into account the cost of production, overall demand-supply, domestic and international prices, inter-crop price parity, terms of trade between agricultural and non-agricultural sectors, the likely effect of the Price Policy on the rest of economy, besides ensuring rational utilization of production resources like land and water, while recommending MSPs.

    GS Economy Questions for IAS Prelims Exam - Agriculture II

    2.    Consider the following statements regarding the Issue price:
    I.    The price at which the food grains are allowed by the government to off take from the FCI—this is the price at which the FCI sells its food grains.
    II.    The government-procured food grains are stored temporarily in the concerned states of their purchase and then transported to their decided FCI godowns as part of the buffer stock.

    Which of the following statement(s) is/are correct?
    a.    Only I
    b.    Only II
    c.    Both I and II
    d.    Neither I nor II

    Answer: c

    Explanation:


    The price at which the food grains are allowed by the government to offtake from the FCI—this is the price at which the FCI sells its food grains. The FCI has been incurring huge losses in the form of food subsidies.

    The government-procured food grains are stored temporarily in the concerned states of their purchase and then transported to their decided FCI godowns as part of the buffer stock. From here they head to the sale counters. The transportation, godowning, the cost of maintaining the FCI, grain losses make the food grains touch higher price that are never affordable by the masses. That is why the issue prices have never been market-based prices. The gap is considered as the element of the food subsidy in India.

    3.    Consider the following statements regarding the policy of maintaining a minimum reserve of food grains in India:
    I.    India has a policy of maintaining a minimum reserve of food grains (only for wheat and rice) so that food is available throughout the country at affordable prices round the year.
    II.    The main supply from here goes to the public distribution system (now TPDS) and at times goes to the open market to check the rising prices if needed.
    III.    As per the current Buffer Stocking Policy of food grains, the minimum stocks on different dates are required to be mentioned.

    Which of the following statement(s) is/are correct?
    a.    Only I
    b.    I and II
    c.    I and III
    d.    All of the above

    Answer: d

    Explanation:


    India has a policy of maintaining a minimum reserve of food grains (only for wheat and rice) so that food is available throughout the country at affordable prices round the year.

    The main supply from here goes to the public distribution system (now TPDS) and at times goes to the open market to check the rising prices if needed. As per the current Buffer Stocking Policy of food grains, the minimum stocks on different dates are required to be mentioned.

    4.    Consider the following statements regarding the Economic Cost of Food grains:
    I.    The economic cost of food grains consists of three components, namely the MSP (and bonus if applicable) as the price paid to the farmers, procurement incidentals, and the cost of distribution.
    II.    The economic cost for both wheat and rice witnessed significant increase during the last few years due to increase in MSPs and proportionate increase in the incidentals between the period 2002-03 and 2010-11.

    Which of the following statement(s) is/are correct?
    a.    Only I
    b.    Only II
    c.    Both I and II
    d.    Neither I nor II

    Answer: c

    Explanation:


    The economic cost of food grains consists of three components, namely the MSP (and bonus if applicable) as the price paid to the farmers, procurement incidentals, and the cost of distribution. The economic cost for both wheat and rice witnessed significant increase during the last few years due to increase in MSPs and proportionate increase in the incidentals between the period 2002-03 and 2010-11 per kg burden on wheat and rice has increased to Rs. 15 (from Rs. 9) and Rs. 20 (from Rs. 12 ), respectively.

    5.    Consider the following statements regarding the Decentralised Procurement Scheme of the Government:
    I.    The decentralised procurement scheme of the Government of India that is in operation since 1997 has evoked good response from the State Governments.
    II.    Under this scheme, the designated States procure, store and also issue food grains under TPDS.
    III.    The difference between the economic cost of the State Governments and the central issue price (CIP) is passed on to the State Governments as subsidy.

    Which of the following statement(s) is/are correct?
    a.    Only I
    b.    I and II
    c.    I and III
    d.    All of the above

    Answer: d

    Explanation:


    The decentralised procurement scheme of the Government of India that is in operation since 1997 has evoked good response from the State Governments. Under this scheme, the designated States procure, store and also issue food grains under TPDS. The difference between the economic cost of the State Governments and the central issue price (CIP) is passed on to the State Governments as subsidy.

    The decentralised system of procurement, helps to cover more farmers under the MSP operations, improves efficiency of the PDS, provides varieties of food grains more suitable to local taste, and reduces the transportation costs of the FCI.

    6.    Consider the following statements regarding the food security system in India:
    I.    Provision of minimum nutritional support to the poor through subsidised food grains and ensuring price stability in different states are the twin objectives of the food security system.
    II.    In fulfilling its obligation towards distributive justice, the government incurs food subsidy.
    III.    The government continues to provide large and growing amounts of subsidy on food grains for distribution under the TPDS, other nutrition-based welfare schemes, and open market operations.

    Which of the following statement(s) is/are correct?
    a.    Only I
    b.    I and II
    c.    I and III
    d.    All of the above

    Answer: d

    Explanation:


    Provision of minimum nutritional support to the poor through subsidised food grains and ensuring price stability in different states are the twin objectives of the food security system. In fulfilling its obligation towards distributive justice, the government incurs food subsidy. While the economic cost of wheat and rice has continuously gone up, the issue price has been kept unchanged since 1 July, 2002.

    The government, therefore, continues to provide large and growing amounts of subsidy on food grains for distribution under the TPDS, other nutrition-based welfare schemes, and open market operations. The food subsidy expenditure31 has increased substantially in the past few years putting severe strain on the public exchequer from a total of Rs. 17,494 crore in 2001-02 it has gone to the level of Rs. 62,929 crore by 2010-11. The fiscal outgo is expected to be more once the proposed National Food Security Act is implemented.

    7.    Consider the following statements regarding the Food Security Bill:
    I.    The National Food Security Bill was introduced in the Lok Sabha on 22 December, 2011 proposed to provide 7 kg. of food grains per person per month belonging to priority households at prices not exceeding Rs. 3 per kg of rice, Rs. 2 per kg of wheat, and Rs. 1 per kg of coarse grains.
    II.    It will benefit up to 100 per cent of rural population (with at least 46 per cent belonging to priority households) and up to 50 per cent of urban population (with at least 28 per cent belonging to priority households), besides providing nutritional support to women and children and meals to special groups such as destitute and homeless.
    III.    In case of non-supply of food grains or meals, entitled persons will be provided food security allowance by the concerned state/UT governments.

    Which of the following statement(s) is/are correct?
    a.    Only I
    b.    I and II
    c.    I and III
    d.    All of the above

    Answer: d

    Explanation:


    The National Food Security Bill was introduced in the Lok Sabha on 22 December, 2011. As per the provisions of the Bill, it:

    • Is proposed to provide 7 kg. of food grains per person per month belonging to priority households at prices not exceeding Rs. 3 per kg of rice, Rs. 2 per kg of wheat, and Rs. 1 per kg of coarse grains and to general households not less than 3 kg of food grains per person per month at prices not exceeding 50 per cent of the MSP for wheat and coarse grains and derived MSP for rice.

    • It will benefit up to 75 per cent of rural population (with at least 46 per cent belonging to priority households) and up to 50 per cent of urban population (with at least 28 per cent belonging to priority households), besides providing nutritional support to women and children and meals to special groups such as destitute and homeless, emergency and disaster affected, and persons living in starvation. Pregnant and lactating women will also be entitled to maternity benefit of Rs. 1,000 per month for six months.

    • In case of non-supply of food grains or meals, entitled persons will be provided food security allowance by the concerned state/UT governments. Provisions for reforms in the TPDS such as doorstep delivery of food grains, application of information and communication technology (ICT) including end to end computerisation, leveraging ‘aadhaar’ for unique identification of beneficiaries have also been made in the Bill. Provisions have also been made for transparency and accountability including disclosure of records relating to the PDS, social audits, and setting up of vigilance committees besides an elaborate grievance redressal mechanism.

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