Economics

Why is buffer stock created by the government?


SOLUTION
(i) Buffer stock is the stock of foodgrains, namely wheat and rice procured by the government through Food Corporation of India (FCI). The FCI purchases wheat and rice from the farmers in states where there is surplus production. The purchased foodgrains are stored in granaries.
(ii) Thus, buffer stock is created by the government to distribute these foodgrains in the deficit areas and among the poorer strata of society at a price lower than the market price.
(iii) Buffer stock also helps resolve the problem of shortage of food during adverse weather conditions.
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