UPSC Prelims 2019·GS1·economy·economic sectors and development

The economic cost of food grains to the Food Corporation of India is Minimum Support Price and bonus (if any) paid to the farmers plus

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Last updated 23 May 2026, 3:31 pm IST
  1. Atransportation cost only
  2. Binterest cost only
  3. Cprocurement incidentals and distribution costCorrect
  4. Dprocurement incidentals and charges for godowns

Explanation

The economic cost of food grains to the Food Corporation of India (FCI) is the total cost incurred by the FCI in procuring, storing, and distributing food grains. It is calculated as follows: Economic Cost = Minimum Support Price (MSP) + Bonus (if any) paid to farmers + Procurement Incidentals + Distribution Cost. Procurement incidentals include various costs incurred during procurement, such as mandi charges, taxes, commission to agents, administrative expenses, and storage costs for a short period before distribution. Distribution cost includes freight charges, handling charges, storage/godown charges (for longer durations), interest on working capital, and other administrative overheads related to distribution to various states under public distribution system (PDS). Therefore, options that only mention transportation cost or interest cost are incomplete. The most comprehensive and correct option is 'procurement incidentals and distribution cost'.
economy: The economic cost of food grains to the Food Corporation of India is Minimum Support Price and bonus (if any) paid to th

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