Union govt starts selling onions at reduced rates as prices soar

Lower supplies due to delayed harvests of the summer crop have driven prices of the commonly consumed vegetable for a second time in the past six months

The Union government has started selling onions to consumers at a subsidised rate of ₹25 per kg in over a dozen cities to make the item affordable and cool prices by boosting availability, a top official aware of the matter said.

Lower supplies due to delayed harvests of the summer crop have driven prices of the commonly consumed vegetable for a second time in the past six months, prompting the government to impose a minimum export price (MEP) $800 a tonne. MEP is a price threshold below which exporters can’t sell to global buyers. It is a measure to limit overseas shipments.

Retail prices have leapt to ₹70-80 per kg in some cities, more than double from ₹30 a couple of weeks ago. Urban consumers tend to be sensitive to a rise in onion prices compared to other grocery items because of its widespread use in Indian dishes.

On Wednesday, two state-backed food agencies launched operations to sell subsidised onions from the consumer ministry’s reserves of 500,000 tonne in food vans in several cities, including Delhi, Jaipur, Bikaner, Kota, Chandigarh, Jalandhar, Bhopal, Raipur, and Hyderabad.

Read Here: As prices soar, UP mulls selling onion at wholesale rate

The government’s intervention has led to some moderation in prices in some consumption centres, official data shows. “Prices have started to come down and will come down further due to the imposition of minimum export prices and sale of cheap onions by the government,” the official said.

Controlling food inflation is a priority for the Modi government. The ruling Bharatiya Janata Party (BJP) faces elections in five states later this month and the general elections in 2024.

On Wednesday, the average price of the vegetable in north zone stood at ₹56.89 a kg, while it was ₹50.92 a kg in the west zone, according to data from the consumer affairs ministry’s price monitoring cell. In the north-east, average retail price stood was ₹60 a kg.

Onion, a volatile item, has seen frequent price swings this year due to extreme weather and a deficient monsoon, which damaged crops in Maharashtra and Karnataka, two large producer states, where farmers were forced to replant the summer crop.

Read Here: Onion prices up by 50%; high demand, low supply to blame

Unlike in tomatoes or most greens, whose elevated prices have pinched household budgets, in the case of onions, the government maintains nearly 500,000 tonne of reserves, of which 170,000 kgs were sold at a subsidised rate during the previous price spiral in August. The government can, therefore, intervene in markets to cool prices by releasing onion stocks when supplies show signs of bottoming out.

India produces nearly 30 million tonne of the bulb annually while consumption demand stands at 16 million tonne.

The current price spiral comes despite the NCCF and NAFED, two state-backed food agencies, undertaking “calibrated disposal of the procured stocks in major consumption centres”.