Statement — Inflation has reached its highest level in twenty years with no sign of softening in the coming months.\n\nCourses of Action —\nI. The Government should reduce taxes on essential commodities with immediate effect.\nII. The Government should ask farmers to sell their products at lower prices.

Introduction / Context:
Inflation control involves demand- and supply-side tools. Immediate relief for consumers often comes from tax and duty rationalization on essentials, while coercive price controls on producers can distort markets and reduce supply.

Given Data / Assumptions:

• State: inflation elevated and persistent.
• COA I: cut taxes on essentials (VAT, cesses) to lower retail prices quickly.
• COA II: direct farmers to sell at lower prices.

Concept / Approach:
COA I directly and lawfully lowers consumer prices by trimming the tax component, with predictable, implementable impact. COA II interferes with farmgate pricing and may be unenforceable, unfair, and counterproductive (discouraging supply). The statement does not suggest coercive controls over individual producers; it calls for policy levers within the Government’s control.

Step-by-Step Solution:

Verification / Alternative check:
Even when supply is tight, rationalizing taxes can moderate spikes; asking farmers to accept lower prices may reduce supply and worsen inflation.

Why Other Options Are Wrong:

Common Pitfalls:
Assuming producers absorb inflation without consequence; cost structures matter.

Final Answer:
Only I follows.