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‡ Introduction of the 'New Economic Policy¶
‡ The 'bread basket of India', where a majority of
the people were farmers.
‡ Prefer a good crop or a situation where the fields
are ravaged by pests and diseases??
‡ If disaster strikes -the entire agricultural sector,
it cannot be called a disaster at all.
 | 



‡ Demand for food is price inelastic. If there is a shortage

of food, the price of the crops rises.
‡ Individual farmer is a price taker in the sense that he
cannot influence the price of the crop. The farmer can
maximize his output by increasing production to the
extent possible.
‡ If due to a poor monsoon, all the farmers are affected,
then each of them benefits.

An individual farmer will benefit if he has a good harvest but in

general the harvest is poor. On the other hand, an individual
farmer will suffer if the general harvest is good but he has a poor
harvest.
 —   
 
‡ Where there is good harvest at the individual level but in
general the harvest is poor.
‡ The committee observed that the farmers are against the
government policy of importing food grains when there is
a shortage in the food supply.
‡ The government should learn to distribute the grains
properly, rather than importing food grains, because in
this way it harms both the farming and the non-farming
communities.

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In case of excess supply of food grains, the
government can take the following measures:
1. MINIMUM SUPPORT PRICES:

In case of excess supply, farmers are left with a surplus of

their produce. This may de motivate them to produce in the
subsequent years. To avoid this the government provide the
farmers with a minimum support price. Under this scheme,
the government buys the surplus of the farmers at a
minimum price which is fixed by the government. This price
varies from state to state.·
]. EXPORT :
The surplus food grains can be exported to other countries. This
will add up to the National Income of the country.

3. STORAGE :
In India, the agriculture depends greatly on the monsoons.
Since the monsoons in India is uncertain, there is a possibility
of crop failure in the country. Therefore a part of the excess
supply should definitely be stored to fight the future
uncertainties.

4. DONATION:
A small part of the excess supply of the food grains shall be
used by the government to feed people who live below the
poverty line. These should also be used to feed the children in
government run schools where all children below 14 years of
age are entitled free education and food.
 º 

 


 


In case of excess supply of food grains, the government can
take the following measures:
v
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These are shops which are run by the government which provide food
grains to the customers at a nominal cost. These shops provide the
customers with a particular amount of food grains i.e. the customers
can buy only a particular amount of food grains which depends on the
family size of the customers. Thus consumers are protected from the
rise in prices.

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The government can import food grains from abroad to supplement
the shortage of food grains in the country.

GOVERNMENT MEASURE
m % % % %%v%(&%
In case of shortage of food grains in a particular state of the
country, this problem can be overcome by buying the food
grains from a state which has a surplus production and give it
to the state with the shortage.

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Food grains are stored by the FCI or the Food Corporation of
India. Government can use the grains stored in the previous
years to match the shortage in the current year.

5. PROPER DISTRIBUTION:
Government must ensure proper distribution throughout the
country.

GOVERNMENT MEASURE
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