Answer:

Buffer stocks are reserves of essential commodities maintained to manage supply and demand fluctuations. Introduced in India during the 4th Five Year Plan (1969-74), they ensure food security, economic stability, and price control. For instance, buffer stocks of rice and wheat maintained by the Food Corporation of India (FCI) ensure consistent availability of these staples during adverse conditions, supporting food security and price stability.

Role of Government-Controlled Buffer Stocks in Stabilising Food Prices:

• Release During Shortages: Buffer stocks are released during periods of shortage to boost supply and stabilise prices, ensuring availability.
  For example: During the onion price spike in 2019, the Indian government released buffer stocks to increase supply, control prices, and prevent inflation, ensuring onions remained affordable.
• Preventing Price Spikes: By maintaining buffer stocks, the government can prevent drastic price spikes during supply shortages, balancing market demand.
  For example: In 2020, the government released pulses from buffer stocks to stabilise prices, ensuring pulses remained available and affordable despite production shortfalls.
• Smoothing Price Fluctuations: Buffer stocks help smooth out extreme price fluctuations by regulating supply and demand dynamics in the market.
• Reducing Inflation: Buffer stocks curb inflation by increasing market supply during shortages, thus preventing excessive price increases.
  For example: The release of wheat and rice stocks in 2021 helped control rising food inflation in India, ensuring staple grains remained affordable for consumers
• Supporting Farmers: Buffer stocks support farmers by ensuring a stable market, preventing price crashes due to oversupply, and providing price stability.
  For example: The government procured excess milk and converted it into skimmed milk powder (SMP) to stabilise milk prices for farmers, preventing financial losses due to oversupply.

Government-Controlled Buffer Stocks and Economic Stability in India:

• Food Security: Buffer stocks ensure consistent access to essential food items, promoting national food security and stability.
  For example: During the COVID-19 pandemic, essential items were distributed to ensure food availability for the poor, preventing hunger and ensuring food security.
• Economic Stability: Buffer stocks prevent economic shocks by stabilising prices and maintaining market balance, contributing to economic stability.
  For example: The release of buffer stocks during the 2018 drought in Maharashtra helped stabilise prices and support economic stability, preventing economic distress in the region.
• Climate Resilience: Buffer stocks mitigate the impact of climate-induced supply shocks on food availability, enhancing climate resilience.
• Supporting Farmers: By procuring excess produce during surplus years, buffer stocks provide farmers with a stable market and fair prices, contributing to rural economic stability.
• Sustaining Welfare Programs: Buffer stocks ensure the smooth operation of welfare schemes, which are crucial for economic stability by supporting vulnerable populations and maintaining social stability.
  For example: The Pradhan Mantri Garib Kalyan Anna Yojana (PMGKY) relied on buffer stocks to distribute food to the poor during the COVID-19 pandemic, ensuring economic and social stability by preventing hunger and deprivation.

As India faces increasing climate-induced volatility and economic challenges, government-controlled buffer stocks will be pivotal in stabilising prices and supporting economic stability. By ensuring consistent supply, mitigating inflation, and supporting welfare schemes, these buffer stocks will enhance food security and economic resilience, driving sustainable development and fostering a stable economic environment in the future.

DOWNLOAD PDF