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Why buffer stock is created by the government? - Economics
Why buffer stock is created by the government?
The government creates a buffer stock for the following reasons:
To Distribute Food in Deficit Areas: It allows the government to supply food grains to regions where production is low or insufficient.
To Support the Poorer Strata of Society: Buffer stock is used to provide food grains to the poor at a price much lower than the market price (known as the Issue Price).
To Resolve Food Shortage during Calamities: It acts as a safety net during natural disasters, droughts, or crop failures, ensuring that there is no starvation.
To Stabilize Prices: By releasing food grains from the buffer stock during periods of high demand or low supply, the government helps prevent a sharp rise in market prices.
To Ensure Regular Supply: It ensures a continuous and steady supply of essential food grains (wheat and rice) through the Public Distribution System (PDS) throughout the year.