Question

Why is buffer stock created?

Hint:

Buffer stock is crucial for maintaining economic stability, especially in countries dependent on agriculture, to prevent inflation and food insecurity.

Answer 1

Overview:
Buffer stock refers to the reserve stock of essential goods, particularly food grains, maintained by the government to stabilize prices and ensure that there is no scarcity during times of shortages. The creation of buffer stock is an important part of economic and agricultural planning.
Reasons for Creating Buffer Stock:
1. Price Stabilization:
Buffer stock helps stabilize the prices of essential goods, especially food grains, by preventing sharp price fluctuations caused by seasonal variations or unforeseen shortages.
2. Supply Security:
Buffer stock ensures that there is a consistent supply of essential goods during times of poor harvests or natural disasters. It acts as a safeguard against shortages, allowing the government to maintain public welfare.