The economic cost of food grains to the Food Corporation of India is Minimum Support Price and bonus (if any) paid to the farmers plus
Detailed Explanation:
Answer: Option 3 — Procurement incidentals and distribution cost
The economic cost of food grains to the Food Corporation of India (FCI) comprises the Minimum Support Price (MSP) and bonus paid to farmers, plus all expenses incurred during procurement and distribution. Procurement incidentals include costs like commission to agents, bagging materials, labor charges, and transportation from collection centers to storage depots. Distribution costs cover transportation to fair price shops, handling charges, storage losses, and delivery expenses. While interest costs and godown charges are part of overall FCI operations, the specific economic cost formula focuses on procurement incidentals and distribution costs as the primary additional components beyond MSP.
📝 Short Notes: FCI Economic Cost Components
| Component | Details |
|---|---|
| Minimum Support Price (MSP) | Base price paid to farmers; announced by government for 23 crops based on CACP recommendations |
| Bonus | Additional payment over MSP by some states to incentivize farmers |
| Procurement Incidentals | Commission to procurement agencies, bagging, stitching, labor, loading/unloading, internal transport to godowns |
| Distribution Cost | Transportation from godowns to FPS, handling charges, transit losses, delivery expenses |
| Economic Cost Formula | Economic Cost = MSP + Bonus + Procurement Incidentals + Distribution Cost |
| Issue Price | Subsidized price at which food grains are sold through PDS; difference between economic cost and issue price is subsidy |
Question 3 of 5 MSP and Procurement
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