MSP, APMC & Procurement — Set 8

Correct Answer: B. MSP plus procurement incidentals, storage, and distribution costs

Economic cost is the total cost incurred by FCI including MSP paid to farmers, procurement incidentals (mandi charges, labour, transport), storage costs, and distribution/movement costs. Economic cost is the base for calculating food subsidy as the difference between economic cost and Central Issue Price. When economic cost rises and CIP is kept low, food subsidy increases. Reducing economic cost through operational efficiency is a major challenge for FCI.

Correct Answer: B. Difference between economic cost and central issue price times quantity distributed

Food subsidy = (Economic Cost – Central Issue Price) × Quantity distributed. As CIP is kept very low (and since 2024, zero for PMGKAY beneficiaries), the food subsidy is essentially the entire economic cost times quantity distributed. India's food subsidy bill exceeds Rs 2 lakh crore annually. It is the second largest component of central government subsidies after fertilizer subsidy.

Correct Answer: C. 2013

The National Food Security Act (NFSA) was passed in September 2013. It provides a legal entitlement to subsidized food grains for up to 75% of rural population and 50% of urban population. Under NFSA, eligible households are entitled to 5 kg of food grains (wheat, rice, coarse cereals) per person per month at subsidized prices. The Antyodaya Anna Yojana (AAY) households get 35 kg per household per month.

Correct Answer: B. It helps farmers reduce input costs and improve yield for MSP-covered crops

The Soil Health Card (SHC) scheme helps farmers understand their soil's nutrient status and apply balanced fertilizers, thereby reducing unnecessary input costs. Lower input costs can improve the net return from MSP-covered crops. CACP uses state-level cost of cultivation surveys that implicitly capture soil and input productivity. The SHC scheme was launched in 2015 and targets to cover all agricultural land.

Correct Answer: B. Private traders to procure on behalf of government at MSP

PPSS (Pilot of Private Procurement and Stockist Scheme) under PM-AASHA allows private traders/companies to procure oilseeds from farmers at MSP, with the government bearing the price risk. The private entity is paid a service charge for procurement operations. It was piloted in a few districts of Maharashtra. The scheme aims to leverage private sector logistics and storage infrastructure.

Correct Answer: B. Tomato, Onion, and Potato (TOP)

Operation Greens was launched in 2018 with Rs 500 crore allocation to stabilize the prices of Tomato, Onion, and Potato (TOP vegetables). It provides 50% subsidy on transportation and storage charges to reduce price volatility. The scheme was later expanded to cover 22 perishable fruits and vegetables (TOP to TOTAL). NAFED and SFAC are key implementing agencies.

Correct Answer: B. Flexible revolving credit for farm inputs and crop cultivation expenses

The Kisan Credit Card (KCC) provides farmers with flexible revolving credit for crop cultivation, post-harvest expenses, and ancillary activities. It was launched in 1998 by NABARD and is implemented by banks. Farmers can withdraw and repay as needed within the sanctioned credit limit. Interest subvention makes KCC loans available at 4% per annum (after 3% government subvention on 7% rate).

Correct Answer: B. 2007

Rashtriya Krishi Vikas Yojana (RKVY) was launched in 2007-08 as a Centrally Sponsored Scheme to increase public investment in agriculture and allied sectors. It gives states flexibility to prepare their own agricultural plans. RKVY has been restructured as RKVY-RAFTAAR (Remunerative Approaches for Agriculture and Allied sector Rejuvenation) to focus on agri-entrepreneurship and innovation. States must prepare District Agriculture Plans (DAPs) to access RKVY funds.

Correct Answer: C. 2%

Under PMFBY, the premium to be paid by farmers for Kharif crops is a maximum of 2% of the sum insured. For Rabi crops, the farmer premium is maximum 1.5%. For commercial and horticultural crops, the farmer premium is maximum 5%. The remaining premium (actuarial rate minus farmer share) is shared between state and central governments.

Correct Answer: C. 2015

Pradhan Mantri Krishi Sinchai Yojana (PMKSY) was launched in 2015 by merging several irrigation schemes. Its twin goals are 'Har Khet Ko Pani' (water to every field) and 'More Crop Per Drop' (efficient water use). It covers micro-irrigation (drip and sprinkler) and watershed development. PMKSY aims to achieve convergence of investments in irrigation from source to farm level.