Question

Mohan is a farmer who cultivates foodgrains. But the prices of the foodgrains drop in the market. However, Mohan is protected from the expected loss. How?

• A. The government purchases the foodgrains at the Minimum Support Price.
• B. The government pays for the loss of the foodgrains.
• C. The government directs the farmers to the local markets.
• D. The government provides allowances for the farmers.

Answer 1

The correct option is A The government purchases the foodgrains at the Minimum Support Price.

The Food Corporation of India purchases foodgrains from farmers at a fixed price for their crops. This price is called the Minimum Support Price or MSP. The MSP is pre-announced every year based on the cost involved in the production of the foodgrains. The MSP enables farmers to grow more crops as they are protected from fluctuations in the foodgrains' market value.