Price pinch again, onions reach two-year high | india | Hindustan Times
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Price pinch again, onions reach two-year high

Onion prices hit a two-year high at the benchmark Lasalgaon wholesale market in Nashik on Thursday and traders said a further rise was imminent, signalling more pain for households and a policy headache for the government.

india Updated: Aug 21, 2015 00:16 IST
HT Correspondents

Onion prices hit a two-year high at the benchmark Lasalgaon wholesale market in Nashik on Thursday and traders said a further rise was imminent, signalling more pain for households and a policy headache for the government.

The politically sensitive commodity is a key driver of food inflation that has often led to electoral setbacks for ruling parties and could again prove to be a decisive poll issue ahead of the upcoming assembly elections in Bihar, besides queering the pitch for a possible interest rate cut by the Reserve Bank of India.

Prices of fine-quality onion at the Agriculture Produce Market Committee, Lasalgaon, Asia’s largest onion market, touched Rs 5,500 a quintal on Thursday while the average price hit a two-year high of Rs 4,900 as supplies dipped drastically.

“Prices have touched a two-year high at Lasalgaon due to a decline in supplies as harvesting has been delayed and now it seems there will also be a fall in production of kharif onion,” National Horticultural Research and Development Foundation director RP Gupta said.

This isn’t a happy augury ahead of the festival season as it could force millions of families to cut other expenses to make up for a ballooning food bill.

Official numbers say retail food inflation was 2.15% in July but skyrocketing onion and other prices show food prices have more than doubled from last year.

Onion is selling at Rs 80 a kg in some areas of Delhi compared to Rs 37 a kg in August last year.

Worse, onion and other food prices have risen more than 50% since July. The pace of growth is worrisome, with onion prices having more than tripled in Delhi since June.

The situation has revived memories of 1998 when the BJP lost the Delhi assembly elections largely because of a spike in onion prices, and more recently 2013 when prices touched Rs 100 a kg.

Attempts by the AAP government to sell the staple at subsidised rates — Rs 30 a kg at fair price outlets with a person allowed to buy 1kg a day — have not helped much as only a few buyers are aware of these outlets.

In Kolkata, state agriculture minister Purnendu Bose said officials were conducting regular checks to prevent hoarding. The central government has asked the state-owned MMTC to import 10,000 tonnes of onion to boost supplies.

Retail sellers say they are suffering losses. “It is becoming difficult to sell as customers are buying in smaller quantities. We cannot raise prices much despite the increase in wholesale prices,” Dayanand Darekar, a retailer in Vashi, said.

Onion farmers are badly affected, too. Last year’s crop was damaged by non-seasonal rains while this year farmers are not ready for sowing because of a lack of rains.

“Only 25% of the produce can be sold. We are unable to meet even our costs,” Babaji Evle, a farmer from Renvadi village in Maharashtra’s Ahmednagar, said.

With inputs from HTC Lucknow, Kolkata, Bengaluru and agencies