Which of the following factors/policies were affecting the price of rice in India in the recent past

Question

Which of the following factors/policies were affecting the price of rice in India in the recent past?Minimum Support PriceGovernment's tradingGovernment's stockpilingConsumer subsidiesSelect the correct answer using the code given below.

Accepted Answer

Option 1 is correct: MSP results in a diversion of stocks from the open market, thus, driving up the price for the ultimate consumers. Further, MSP prevents the prices from going down (directly). Price will not go below the MSP - The farmer can sell the produce to the government at the MSP. It will also prevent the price from going up (indirectly) - The price will shoot up only when the production is less, but if the production will increase, then the prices will not be too high.Option 2 is correct: Though factors like climatic shocks determine rice production and prices in the short run, the future scenario of rice prices must be based on long-term projections of rice demand and supply. Trading results in an increased demand in the international markets, which affects the price of rice in India.Option 3 is correct: Low stock levels constrain the ability to buffer the price rise resulting from other factors.Option 4 is correct: Subsidies lower the prices for the ultimate consumer. Hence all the given factors affect/ have affected the price of rice in the country.