Correct Option
The correct option is (d) 1, 2 and 3.
Explanation
Buffer stocks are maintained by the Food Corporation of India (FCI) to ensure national food security and price stability. However, the accumulation of food grains far beyond the prescribed buffer norms has led to significant fiscal and logistical challenges, often referred to as the "problem of plenty."
Statement-wise Analysis
- Statement 1 is Correct: The storage of massive food stocks involves high carrying costs, which include freight, handling, storage charges, interest on funds, and transit losses. When stocks exceed the buffer norms, these costs increase disproportionately, inflating the food subsidy bill and straining public expenditure.
- Statement 2 is Correct: Due to the lack of adequate covered storage capacity (silos or godowns), a significant portion of the buffer stock is stored in the open under the Cover and Plinth (CAP) method. This exposure often leads to wastage, rotting, and deterioration in grain quality due to moisture, pests, and rodents.
- Statement 3 is Correct: To address the issue of ballooning stocks and the associated fiscal burden, various committees (such as the Shanta Kumar Committee) and Economic Surveys have suggested rationalizing procurement policies. Freezing the Minimum Support Price (MSP) or limiting open-ended procurement has been suggested as a measure to discourage the over-production of cereals (like rice and wheat) and prevent the accumulation of unmanageable surpluses.
Key Takeaway
The buffer stock policy in India faces criticism for its high economic costs (carrying costs) and storage inefficiencies (wastage). Policy recommendations to address these issues include rationalizing MSP and shifting away from open-ended procurement to reduce the fiscal burden.