Centre to release onion stocks to tame inflation

Onion supplies are tightening in some markets and the kitchen staple could soon see an inflationary spell because of a lean annual season when stocks dip

The Union government on Friday announced through an official statement that it will start releasing stocks of onion from state-owned reserves amid high food inflation driven by vegetables and cereals.

Unlike tomatoes or most green vegetables, the government maintains nearly 300,000 tonne of reserves in the case of onions. (HT File Photo)

Onion supplies are tightening in some markets and the kitchen staple could soon see an inflationary spell because of a lean annual season when stocks dip, wholesalers and analysts have said.

Unlike tomatoes or most greens, whose exorbitant prices have adversely impacted millions of households, in the case of onions, the government maintains nearly 300,000 tonne of reserves. It can, therefore, intervene to cool down prices by releasing stocks when supplies show signs of bottoming out.

Union consumer affairs secretary Rohit Kumar Singh on Thursday held a meeting with senior officials of NAFED and NCCF, two state-run food agencies, to finalise “modalities” for releasing onions from a centrally-held buffer.

The government’s price-control strategy for onions will be to push the vegetable in markets, states or regions where retail prices are surging above the all-India average, an official said.

Stocks will be directed also towards markets where the price rise over the previous month and year is above a certain threshold. The vegetable will be disposed of through e-auction, while retail sales option via e-commerce platforms is also being explored, the secretary said.

The quantity and pace of the release of stocks will be calibrated with the prices and availability with the “objective of making onion available to consumers at affordable prices”, the statement said. States will get the widely consumed vegetable at discounted rates for sale through retail outlets of state government-owned cooperatives and food corporations.

On Tuesday, Narendra Wadhwane, the secretary of Lasalgoan agricultural market committee, Asia’s largest onion market in Maharashtra, told HT that farmers were reporting a “lot of damage to stored onions” because of heavy rain over the past month, which in turn has “decreased supplies”.

Analysts also predict a pricey spell. “The acreage under rabi (winter-sown) 2023 (December 2022-January 2023) is estimated to have been lower by 3.5%, led by 25-27% lower realisation by farmers in the previous season,” said Pushan Sharma, economist with Crisil Market Intelligence and Analytics.