Peeling the onion
If the government is really interested in pushing prices down and regaining its credibility, the only way out is to crack down on those jacking up the prices of vegetables to make a profit.india Updated: Sep 19, 2013 03:14 IST
The price of onions, that has been upsetting family budgets across the country for the last two months, is now threatening to have a major impact on the fortunes of the Congress in the coming elections. On Tuesday, the BJP, which lost power in Delhi in 1998 after a similar spurt in the prices of the humble bulb, was quick to point out that this time around the vegetable will prove to be the Congress’ nemesis.
The UPA government, however, is trying to mitigate such negative thoughts: food minister KV Thomas on Tuesday said that the prices of onions are "likely" to come down in the next 15-20 days when fresh stock enters the market. He blamed the weather, state governments, wastage, and hoarding for the current situation. But there was no explanation as to why the government is not going after the hoarders.
Mr Thomas’ assurances will mean little for the people because not just onion prices but the rates of most vegetables have gone up in the last few months. In August, food items became costlier by 18.8% on a year-on-year basis. While the highest increase was in the case of the onion, which reported an increase of 245% year-on-year, vegetable prices rose by 77.81%.
Food policy analysts say there has been a spurt in the prices of vegetables not because of production bottlenecks, but due to hoarding and because a small number of wholesalers have formed a cartel that dominates the retail supply chain of vegetables. The rising price of onion, they claim, is having a domino effect on the prices of other vegetables.
That a decline in production is not the reason for rising vegetable prices is also clear from the fact that a Food Agriculture Organization (FAO) report in May said that India has become the second largest producer of fruits and vegetables in the world.
A recent report in Down to Earth, an environment and science magazine, analysed the reasons behind India’s rise in the FAO chart: farmers, especially those reeling from cyclical droughts and the declining productivity of staple crops, are turning to growing vegetables, even though this has traditionally been considered a riskier proposition due to the shorter shelf life of vegetables.
Since those who control the vegetable trade have political connections and bankroll political parties, there is much reluctance to act against them. If the government is really interested in pushing prices down and regaining its credibility, the only way out is to crack down on those jacking up the prices of essential food items to make a profit. At present, the comforting words of UPA ministers on the issue are sounding extremely hollow.