The Centre has asked state governments to crack down on hoarding to reduce onion prices, which have risen to a record high.
In a message sent out by the food and consumer affairs ministry, states have been asked to launch inspections and track transactions at local wholesale markets, an official said.
Nafed, a large cooperative, has recommended to the Centre to raise the minimum price at which onions can be exported, aimed at discouraging exports.
Prices of onions — a staple for most Indians — are steadily climbing, an effect of last summer’s patchy monsoon, but the farm ministry still hopes they would fall back to usual levels once the winter harvests kick in.
Consumers fretted about a nearly 58% rise in prices in the last month alone. For governments, onions are hot potato. In 1999, the BJP is said to have lost power in Delhi because of a failure to control them.
Onion stocks usually bottom out during this time of the year, a seasonal phase when summer harvests are nearly exhausted and winter harvests not fully ready. But this year, there are signs of a major shortfall from last year’s partial drought.
If shortages worsen, the government could order fresh imports, Pakistan being India’s swiftest and cheapest option.
India’s inflation battle often runs through the country’s onion markets, which remain highly opaque and ridden with malpractices, helping traders push prices up on the slightest pretext, at least three recent probes suggest.
Onion prices had shot up over 200% in the past six months. During the June-September monsoon months, prices of vegetables remain elevated because of rain-related supply disruptions, including slow truck movement. Farmers take longer to bring produce to markets.
However, malpractices help traders to raise prices. Studies show evidence of monopolistic practices in Lasalgaon, Asia’s largest onion market near Nashik in Maharashtra, which sets prices around the country.