What do you understand by market price, issue price and procurement price? Describe the role of FCI in food subsidies.

Market Price, Issue Price, and Procurement Price:

1. Market Price: Market price refers to the price at which a commodity or product is bought and sold in the open market, determined by the forces of demand and supply. It fluctuates based on various factors such as production levels, consumer demand, market competition, and government policies.

2. Issue Price: Issue price is the price at which a commodity or product is supplied or distributed to consumers by the government or other agencies. It may be subsidized or fixed below the market price to make essential goods affordable to consumers, especially for items like food grains or other necessities.

3. Procurement Price: Procurement price is the price at which the government or authorized agencies purchase commodities, typically agricultural produce, from farmers or producers. This price is often set by the government to support farmers and ensure a stable income for them, especially during times of market fluctuations or price volatility.

Role of FCI (Food Corporation of India) in Food Subsidies:

The Food Corporation of India (FCI) plays a crucial role in the management of food subsidies in India. FCI is responsible for procuring food grains such as rice and wheat from farmers at government-fixed procurement prices. These grains are then stored in FCI-operated warehouses across the country.

The main objectives of FCI include:

• Ensuring food security by maintaining adequate buffer stocks of food grains.
• Implementing the Public Distribution System (PDS) to distribute subsidized food grains to eligible beneficiaries.
• Supporting farmers by providing them with a minimum support price (MSP) for their produce and purchasing surplus grains to stabilize market prices.
• Managing the distribution and storage of food grains efficiently to prevent wastage and ensure timely delivery to intended beneficiaries.

FCI operates under the Ministry of Consumer Affairs, Food and Public Distribution and plays a pivotal role in implementing government policies related to food procurement, storage, and distribution. By managing food subsidies effectively, FCI contributes to ensuring access to affordable food for vulnerable sections of society and stabilizing food prices in the market. However, challenges such as operational efficiency, storage infrastructure, and leakage in distribution systems continue to be addressed for effective implementation of food subsidy programs.