India’s onion prices a real tearjerker for Modi

August 31, 2015 1:36 PM (UTC+8)

 

The price of onions is always a politically sensitive subject in India. A steep rise in onion prices has brought down governments.

Most Indians use onions in every type of food and they cannot tolerate any government which keeps prices of onion high for long.

Although successive governments are aware of this sensitive issue and have taken measures such as emergency imports, export curbs, stock restrictions and anti-hoarding drives, prices of onions have remained reasonably high since the 1980s.

This year too, the possibility of a rise in onion prices was felt in February when sudden rain and hailstorms damaged the standing crop in several onion-producing states. Going forward, the situation still threatens to take a hefty slice out of average Indian wallets.

It’s surprising that the pro-farmer Modi government didn’t notice these warning signs and take remedial measures such as buying onions in bulk to foil hoarders’ designs, importing the commodity to enhance the supply and dehydrating them to extend their shelf life.

While government agencies miserably failed to respond to the situation, private traders in northern Indian showed the way by getting supplies from Afghanistan by road.

In the case of such a politically tearful commodity, India’s government clearly needed an effective mechanism to monitor prices of onions without harming the interests of producers. They also needed to adopt measures for increasing the onion yield by providing farmers with irrigation water, fertilizers and chemicals to protect the crop.

The average yield of onions in India, around 15 tons a hectare, is far lower than the global average of 19-20 tons.

Maharashtra, Madhya Pradesh and Karnataka states are India’s major producers of onions which are marketed through about 50 major ‘mandis’ (markets).

The Lasalgaon mandi in Maharshtra is Asia’s largest wholesale market for onions. Prices of onions are reasonably low there.

While the next election may be far off for the Modi government, it should be aware that any major price rise at Lasalgaon market will tilt the scales against them.

If the policymakers in New Delhi aren’t careful in monitoring the situation, the price of onions is sure to bring the government to tears.

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