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 validated by the government's procurement of food grains at the Minimum Support Price (MSP) and its management of a buffer stock, which together guarantee food security and market price stability.
Statement 2 is also validated by the MSP's function as a safety net for farmers, shielding them from price volatility and ensuring a baseline income for their agricultural produce.