GS PrelimsAgricultureMinimum Support Price (MSP)2019
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
A
transportation cost only
B
interest cost only
C
procurement incidentals and distribution cost
D
procurement incidentals and charges for godowns
Correct Answer: Option C
Explanation
1. The economic cost of food grains for the Food Corporation of India (FCI) represents the total cost incurred by FCI in procuring, handling, storing, and distributing the food grains.
2. This cost starts with the acquisition cost, which is the Minimum Support Price (MSP) and any bonus paid to the farmers.
3. To this acquisition cost, several other costs are added.
4. Procurement Incidentals include costs incurred during the procurement process like mandi charges, labour costs, bagging costs, transport to storage points (godowns), storage charges, etc.
5. Distribution Cost includes freight charges for moving grains from surplus to deficit regions, handling expenses, storage losses, administrative overheads, and interest cost on the capital blocked.
6. Option (C) correctly identifies these two broad categories - procurement incidentals and distribution cost - which encompass all the post-MSP expenses that make up the total economic cost.