Onion prices bring tears to the eyes of Indian consumers
Posted on October 2nd, 2019

Courtesy Straits Times

NEW DELHI – In India, the government gets the jitters when the price of onions, a staple in Indian cooking, go up.

Onion prices have doubled and even tripled in many cities over the past few weeks, going for anything from 60 rupees (S$1.17) to 100 rupees (S$1.95) a kilogram, much to the dismay of consumers. Some state governments are subsidising the vegetable like in Delhi where government-run enterprises are selling it for 24 rupees a kg.

The prices began spiking after erratic rainfall impacted crops.

The Narendra Modi government swung into action on Sunday, banning the export of onions and imposing stock limits on onion traders to prevent hoarding to artificially drive prices up.

Retail traders can only stock 10,000kg of onions at a time and wholesalers 50,000kg.

Farmers and traders predicted that prices would drop substantially in the next three to four days on the back of the government’s measures.

But for consumers, the prices continue to pinch for now.

Ms Aslina Bibi, a cook, said she was buying very little for her own household and has been cautioned by her employers to use onions judiciously in meal preparations.

“It’s very difficult to cook food without onions. So I put very little just for some taste. I really hope the prices go down soon,” said Ms Bibi, who lives in Gurugram in Haryana.

“Otherwise, who will pay that much for onions?”

In India, household budgets are thrown out of gear when onion prices shoot up and angry voters have been known to vote out governments solely on this one issue.

In 1998, a Bharatiya Janata Party (BJP) government in Delhi was voted out because state elections coincided with a rise in onion prices.

In 1980, while on the comeback trail, former prime minister Indira Gandhi used the price of onions, among other issues, to attack the government. She won the election.

The current onion crisis comes at a time when the ruling BJP is going into its first set of state elections after returning to power in a general election earlier this year. The BJP is seeking to retain power in Haryana and Maharashtra, a key onion producing state, later this month.

“The price of onions has become symbolic. The price of all vegetables are going up but the government has taken no initiative to bring them down. It is only onions because there is a history of governments losing badly due to their prices. It is a politically sensitive issue,” said Professor Sanjay Kumar from the Centre for the Study of Developing Societies, a research institute.

“It just adds to the (economic) problems of the government,” he added.

The rise in onion prices comes at a turbulent time for the Indian economy, which has cast a cloud over the second term of Prime Minister Narendra Modi.

The economy has slowed down, unemployment has gone up and several sectors from auto manufacturing to real estate are struggling.

Not surprisingly, the move to bring down onion prices has found little favour with onion farmers and traders who complain that it has disrupted the market.

“The farmers are already bringing less after the ban. They don’t know if merchants are buying. There is a lot of confusion. It’s not a good situation. Traders need to be able to hold more stock,” said Mr Jaydatta Holkar, chairman of the Agricultural Produce Market Committee in Lasalgaon, a prominent onion market.

Farmers are frustrated over the unpredictability of prices. Last year, due to a glut in production, onion prices dropped to one rupee a kilogram in some places prompting some farmers to burn their crops in protest.

“Every year prices go up and down. Finally farmers were getting a good price. Banning exports is an anti-farmers decision. The government needs to stabilise prices. They should make storage facilities and set a minimum price for farmers,” said Mr Abhimanyu Kohar, a spokesman for Rashtriya Kisan Mahasangh, a federation of 180 farmer organisations.

“In the next two to three days, we will know how much prices go down. In the end, the farmers will not get their prices.”

Meanwhile, some countries like Nepal and Bangladesh, which import Indian onions, have been hit by rising prices.

India exported 2.2 million tonnes of onions in the 2018-19 financial year with production estimated to be around 23.28 million tonnes.

The Daily Star, a newspaper in Bangladesh, reported that onion prices at the retail markets in Bangladesh went up around 71 per cent per kg within a day on Monday following the Indian government ban on onion exports.

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