The economic cost of food grains to the Food Corporation of India is Minimum Support Price and bonus (if any) paid to the farmers plus

Correct Option (C)

The economic cost of food grains to the Food Corporation of India (FCI) comprises the Minimum Support Price (MSP) and any bonus paid to farmers, in addition to:

• Procurement incidentals: These include expenses such as mandi charges, various levies, handling charges, and administrative overheads incurred during the acquisition of food grains.
• Distribution costs: These encompass freight charges for transporting grains from procurement centers to storage and distribution points, storage costs (including godown charges), and other administrative expenses related to the Public Distribution System.

Incorrect Options

Option 1: Transportation cost is a specific component of the broader 'distribution costs'. It does not represent the entire spectrum of additional expenses incurred by FCI beyond MSP and bonus to constitute the full economic cost.

Option 2: Interest cost is a financial liability related to the capital employed by FCI. However, it is not typically included in the definition of the economic cost of food grains for operational and subsidy calculation purposes, which primarily focuses on direct procurement and distribution expenses.

Option 4: While procurement incidentals are correctly identified, 'charges for godowns' represent only a part of the comprehensive 'distribution costs'. Distribution costs also include freight, administrative overheads, and other storage-related expenses, making this option incomplete in defining the full economic cost.