Onion tears: Strictly enforce measures

The sharp increase in onion prices has upset family budgets and taken the essential vegetable beyond the reach of many households. The prices are ruling at about Rs 80 per kg and are expected to go up further, with some fearing that they may even touch Rs 100. In the country’s largest wholesale market for onions, Lasalgaon in Maharashtra, the prices have hit their historical highs. That is why it is feared that the retail prices will also go above the record Rs 100 sooner or later. There are not many chances of the prices easing in the near future because the reasons for the price rise are poor supplies, which cannot be made good very soon, and the limited utility of administrative and other measures to deal with the situation.

Onion crops were damaged because of drought in Maharashtra, Karnataka and parts of Telangana and Andhra Pradesh which are the main producers of the vegetable. Unseasonal rains and hail storms in some areas also hit the crops. The rabi crops which come into the market in August and September are much less than last year’s arrivals. The main wholesale markets reported only one-third of the usual supplies in the last two months. Kharif crops may also be affected because lack of timely rains has hit planting in some producing areas. The government has taken some measures to improve the supplies. It has tried to curb exports by increasing the minimum export price in two instalments. It has also tried to import onions. The MMTC has floated tenders for import from a number of countries, and private traders have already started importing onions from countries like Afghanistan and Egypt.

The administrative measures taken by the government will be effective only if they are seriously and sincerely enforced. Onions have been brought under the Essential Commodities Act. States can now fix stockholding limits and launch anti-hoarding operations. There have been some reports of raids on hoarders. Hoarding had started at the first signs of shortage and price rise, and this aggravated the shortage. Past experience has shown that anti-hoarding operations do not achieve good results because of the collusion between officials and hoarders. The situation has underlined the need for modern storage facilities for perishable commodities, improving rural infrastructure and for reforms in the agricultural marketing system. It has further strengthened the case for the goods and services tax (GST), because a national tax in a common market would have neutralised the local taxes which have added to the price rise.

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