Question 1

Stock limits apply uniformly to all market participants irrespective of their operational scale.

Accepted Answer

Stock limits are highly tiered based on the type of entity, with massive differences in caps for individual retailers (10 tonnes) versus large wholesalers (3000 tonnes).

Question 2

Imposing stock limits means the government seizes or confiscates the surplus wheat from private traders.

Accepted Answer

The government does not confiscate the wheat; instead, traders are given a mandatory 15-day window to sell their excess stock in the open market to bring their holdings under the prescribed limit.

Question 3

Consider the following statements regarding the wheat stock limits imposed under the Essential Commodities Act in May 2025:
1. The limits required all entities to declare their stock positions every Friday on a portal maintained by the NITI Aayog.
2. The stock limits were tiered, allowing wholesalers to store more wheat than individual retail outlets.
3. Entities exceeding the prescribed stock limits were required to surrender the excess grain to the Food Corporation of India without compensation.
How many of the above statements are correct?

Accepted Answer

(a) Only one — Statement 1 is incorrect because the food stock portal is maintained by the Department of Food and Public Distribution (DFPD), not NITI Aayog. Statement 2 is correct; the system is tiered (e.g., wholesalers were capped at 3000 tonnes while individual retailers were capped at 10 tonnes). Statement 3 is incorrect; entities are required to release and sell the excess stock into the open market within 15 days, not surrender it to the FCI. Therefore, only one statement is correct.

Question 4

Match List I (Entity Type under the May 2025 Wheat Stock Limits) with List II (Initial Stock Limit Imposed):

List I
A. Individual Retailer
B. Wholesaler / Trader
C. Processor
D. Big Chain Retailer (Depot)

List II
1. 3,000 tonnes
2. 10 tonnes per outlet
3. 10 times the total number of outlets
4. 70 percent of Monthly Installed Capacity multiplied by remaining months

Select the correct code:

Accepted Answer

(a) A-2, B-1, C-4, D-3 — Under the May 27, 2025 notification: Individual Retailers (A) were limited to 10 tonnes (2). Wholesalers (B) were capped at 3,000 tonnes (1). Processors (C) were limited to 70 percent of their Monthly Installed Capacity (MIC) multiplied by the remaining months of the financial year (4). Big Chain Retailer Depots (D) were capped at 10 tonnes multiplied by their total number of retail outlets (3). Thus, the correct sequence is A-2, B-1, C-4, D-3.

Question 5

Assertion (A): The central government frequently invokes the Essential Commodities Act to impose stock limits on agricultural goods even during years when domestic production hits record highs.
Reason (R): Stock limits are aimed at preventing localized hoarding and unscrupulous speculation that can artificially drive up retail prices despite adequate overall macroeconomic supply.
Select the correct answer:

Accepted Answer

(a) Both A and R are true, and R is the correct explanation of A — Both statements are true. India witnessed record wheat harvests in the 2024-25 crop year (over 117 million tonnes), yet the government still imposed stock limits in May 2025. This confirms Assertion (A). The reason for this apparent paradox is exactly as stated in (R): private entities often hoard stocks in anticipation of future price rises, creating artificial scarcity at the retail level. The government uses the ECA to force these hoarded stocks into the open market, bridging the gap between national supply and local retail availability. Therefore, R is the correct explanation of A.

Wheat Stock Limits Imposed Under Essential Commodities Act

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