Which policy instrument ensured farmers against any sharp fall in prices of the crop?

Minimum support price

The correct answer is Option 3: Minimum support price

The Minimum Support Price (MSP) is a policy instrument that ensures farmers are protected against any sharp fall in crop prices. The government sets a price floor for various crops, and if market prices fall below this level, the government purchases the produce at the MSP, ensuring farmers receive a guaranteed income.

• Buffer Stock: The government maintains a buffer stock of essential commodities like wheat and rice to stabilize prices and ensure food security. This stock is used to manage supply in case of shortages or price spikes. However, maintaining a buffer stock does not directly ensure farmers against a fall in crop prices; it mainly helps in stabilizing consumer prices and ensuring availability.
• Public Distribution System (PDS): The Public Distribution System is a food security system in India that distributes subsidized food and non-food items to the poor. The PDS aims to ensure food security for low-income households, but it does not provide a direct price guarantee to farmers for their crops. Instead, it focuses on making food affordable for consumers.