Civil Services Prep

Prelims 2019 · Agriculture · Question 9

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

  1. transportation cost only
  2. interest cost only
  3. procurement incidentals and distribution cost
  4. procurement incidentals and charges for godowns

Answer

procurement incidentals and distribution cost

  • (a) transportation cost only: Incorrect. Economic cost of FCI is not limited to transport; it includes several other costs beyond MSP.
  • (b) interest cost only: Incorrect. Interest is only one component under carrying/distribution-related costs, not the sole addition to MSP.
  • (c) procurement incidentals and distribution cost: Correct. Economic cost = MSP/issue price paid to farmers + procurement incidentals + distribution cost borne by FCI.
  • (d) procurement incidentals and charges for godowns: Incorrect. Godown/storage charges are only one part of carrying/distribution cost, not the full economic cost.

Answer: (c)

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