Which of the following factors/policies were affecting the price of rice in India in the recent past? [2020]

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

Impact: The MSP is the price at which the government purchases crops from farmers, regardless of the market price. For rice, a major staple crop, the MSP ensures that farmers receive a minimum income, incentivising rice production.
Effect on Price: Higher MSP leads to higher procurement prices, which can push up market prices as it sets a price floor. It prevents rice prices from falling below a certain level, stabilizing farmer incomes but also influencing market supply and prices.

Impact: The government, through agencies like the Food Corporation of India (FCI), engages in large-scale trading of rice, including imports and exports. When there is a shortage, the government may import rice to stabilise the domestic supply. Conversely, if there is a surplus, it may allow exports.
Effect on Price: Government trading decisions affect supply levels in the domestic market. For instance, allowing rice exports in a year of strong production can reduce domestic supply, leading to price increases. Conversely, import decisions in a shortage year can help stabilize or reduce prices by boosting supply.

Impact: The government maintains buffer stocks of rice to ensure food security, especially in times of shortage or price spikes. Stockpiling involves purchasing rice from the market or from farmers at the MSP, which is then stored for future distribution or sale.
Effect on Price: When the government stockpiles large quantities of rice, it can reduce the amount available in the open market, leading to higher prices due to decreased supply. Conversely, releasing stockpiled rice during periods of scarcity can lower prices by increasing supply.

Impact: The government provides rice at subsidized rates through programs like the Public Distribution System (PDS). This ensures that low-income households have access to affordable rice.
Effect on Price: While subsidies help consumers access rice at lower prices, they can also distort market demand. If the demand for subsidized rice rises, it can drive up market prices, especially if the supply is limited. Moreover, subsidies require government procurement at higher MSPs, which indirectly increases market prices.