The correct option is (c).
Explanation
Buffer stocks refer to the reserve of food grains (primarily wheat and rice) maintained by the government through the Food Corporation of India (FCI). These stocks are intended to ensure food security, stabilize prices during shortages, and support the Public Distribution System (PDS). The government sets specific "buffer norms" for different quarters of the year to determine the minimum stock required.
Statement-wise Analysis
- Statement 1 is Incorrect. Contrary to the statement, the actual stock of wheat and rice in the Central Pool has frequently and consistently remained above the minimum buffer norms in recent years. Due to open-ended procurement policies and high production, the FCI often holds surplus stocks significantly exceeding the operational and strategic reserve requirements.
- Statement 2 is Correct. Carrying costs include the expenses incurred on storage, handling, freight, insurance, and interest on working capital tied up in the stock. When buffer stocks exceed the required norms, the government incurs high carrying costs, which increases the food subsidy burden on the exchequer.
- Statement 3 is Correct. The maintenance of massive food stocks, often far beyond the storage capacity of covered godowns, necessitates the use of sub-optimal storage methods (such as Cover and Plinth or CAP storage). This exposure, combined with long storage durations, contributes to wastage and deterioration of grain quality, alongside the high economic cost of holding the inventory.
Key Takeaway
India's buffer stocks for food grains have historically exceeded the prescribed norms, leading to a "problem of plenty" characterized by high fiscal costs (carrying costs) and storage-related wastage, rather than a deficit.