Food Security and the PDS in India
The Food Corporation of India and Buffer Stocks
FCI buys, stores and moves grain, keeping buffer stocks that protect against shortages and price spikes.
Grain reserves act as insurance.
Role
Founded in 1965 during a food crisis, FCI ensures farmers get a floor price and consumers get grain.
Buffer norms
Minimum stock levels are set for each quarter.
Costs
Holding and moving grain costs a lot, and stocks sometimes exceed needs.
Market operations
FCI can sell grain in the open market to cool prices.
A price spike
When wheat prices rise, government sells stock in the open market to bring them down.
Ignoring storage costs
Large stocks are expensive.
Key takeaways
- FCI was founded in 1965.
- It holds buffer stocks.
- Storage is costly.
- Open-market sales cool prices.
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