Question

Read the following statements carefully :
Statement 1 : The purchase of food grains, made by the government on the Minimum Support Price (MSP), is maintained as buffer stock.
Statement 2 : Minimum Support Price (MSP) safeguards the farmers against any sharp fall in farm product prices.
In the light of the given statements, choose the correct option from the following :

• A. Statement 1 is true and Statement 2 is false.
• B. Statement 1 is false and Statement 2 is true.
• C. Both Statements 1 and 2 are true.
• D. Both Statements 1 and 2 are false.

Hint:

The MSP is a key policy tool used to ensure fair prices for farmers and to avoid market instability in agricultural products.

Answer 1

The Correct Option is C

Statement 1 is true because the government procures food grains at the Minimum Support Price (MSP) and maintains a buffer stock to ensure food security and stabilize market prices.
Statement 2 is also true because the MSP is designed to provide a safety net for farmers, protecting them from price fluctuations and ensuring a minimum income for their crops.