What is price policy? State and explain the instruments of price policy



Price policy refers to the policy of directing, regulat¬ing and controlling the prices of goods and services in the economy. It includes two basic instruments which are as follows :
(i) Price Control of Essential Goods : Prices of certain essential goods are controlled with a view to ensuring their availability to all sec-tions of the society.
(ii) Procurement Price and Support Price : Pro-curement price refers to price fixed by the government at which it procures a part of the farmers, produce to run its public distribution system. Support price is that price which is offered by the government to tire farmers for the purchase of their surplus output.
In a situation of inflation, the government ensures that the procurement price as well as the support price are kept within the reasonable limits.