The correct answer is (C) procurement incidentals and distribution cost.
Here's a breakdown of the economic cost of food grains to the Food Corporation of India (FCI):
Minimum Support Price (MSP) and bonus (if any): This is the price paid by the FCI to farmers to procure food grains at a pre-determined level. It serves as a safety net for farmers and ensures some income stability.
Procurement incidentals: These are the additional costs incurred by the FCI during the procurement process. They include expenses like
- Commission to agents or societies involved in procurement
- Bagging materials
- Labor charges for procurement activities
- Transportation from collection centers to storage depots
Distribution cost: This refers to the expenses incurred by the FCI to distribute the procured food grains. It includes
- Transportation costs from storage depots to fair price shops or other distribution channels
- Handling and storage charges at fair price shops
- Losses during storage and transportation
