Regulation of prices in the case of agricultural products is not only desirable but necessary. Explain.
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- As we know that agricultural production depends upon natural factors like rainfall, climate etc. these natural factors creates a situation of drought or surplus production.
- Therefore, in such a situation for helping farmers in case of drought the government should fix a price lower than the market price (which is also known as price ceiling) and in case of the surplus production the government should fix a price higher than the market price (which is also known as price floor).
- Surplus or shortages should be met by the government from its buffer stock operations through Public Distribution System (PDS) such as ration shops or fair price shops.
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