Politics of onion prices: despite a glut of onions rotting in godowns, prices remain high

Onions are selling for ₹120 per kilo in Delhi. That’s not true, said Arvind Kejriwal during a town-hall interaction on Friday - the price is actually ₹150. The central government, he alleged, has a nexus with unscrupulous traders to keep prices artificially high.

All lies, said a BJP spokesman when asked about Kejriwal’s comments. The Centre has arranged for import of another 36,000 metric tonnes of onions from Egypt and Turkey. The first shipment has already arrived and by January 20, you will see that prices will start tumbling.

Consumer Affairs Minister Ram Vilas Paswan has a different take on the problem. Some States are being uncooperative, he says. Adequate quantities of imported onion are already available with NAFED, but State governments are not responding to our repeated offers to augment their stocks.

A State food minister explained why there are no takers of Turkish and Egyptian onions. They are totally bland in taste, he claimed, not pungent enough for Indian tongues. Moreover, why should we go for the imported stuff when our local kharif crop is due to be harvested any time now.

An agricultural economist provides a different perspective - the shortage of onions has already turned into a glut. Large quantities are rotting in godowns, and now imported onions are also available in plenty. Soon kharif harvest supplies will flood the market.

Wholesalers are in a quandary. Retail off-take has slowed down, they complain. We are aware that consumers cannot afford to buy at such high prices and many have got used to drastically cutting down onion consumption. But how can we now start selling to retailers for less than ₹80 per kilo? If we do that, we will suffer heavy losses, we'll be ruined.

The entire onion trade, therefore, appears to have got caught in a vicious circle. Nobody knows for sure who started manipulating prices in the first place. Almost everybody is blaming hoarders who created an artificial shortage in the hope of making a killing.

But they over-played the demand-supply fix. At first, they were delighted when prices sky-rocketted to giddy levels, with the ₹200 per kilo mark being breached in some parts of the country. But then something unexpected happened - citizens decided to do without onions.

Who could have imagined that millions of ordinary Indian housewives – who were already finding it difficult to balance the household budget because of shrinking family incomes – would take the unthinkable decision to cut onions off the menu altogether?

But that's what happened. Barring the relatively well-to-do sections of society, most families have either considerably reduced onion intake or learnt how to do without for some time.

As a result, it is now the sellers of onions who are in tears.

Some conspiracy theorists say that it is all part of the usual plot that politicians hatch with traders every year - it was arahar daal one year, edible oils the next and now it is onions that has been targeted by the unscrupulous ministers-bureaucrats-importers-wholesalers cabal.

Needless to say, there is no hard evidence to substantiate such dark suspicions but lack of proof can never mean absence of guilt.

For the ruling party, the only saving grace in the great onion fiasco is that the spurt in prices has not been restricted to onions alone – potatoes have also become unaffordable for many.

In fact, the general food inflation situation has become rather disconcerting. Two months ago, for instance, eleven States witnessed food prices rising by 6 per cent or more. The highest consumer price index-based inflation rates were in Uttar Pradesh, Madhya Pradesh, Rajasthan, Kerala and Tamil Nadu, as well as some North Eastern States.

Interestingly, Lakshadweep recorded the highest inflation rate among all the 36 States and UTs – the only one that saw double-digit inflation at 10.25 per cent.

At the all-India level, food inflation touched 10.01 per cent in November, up from 7.89 per cent in October, driven by vegetable prices, and onions in particular. However, food inflation in urban areas had already breached the double-digit mark in October itself, when it was 10.47 per cent. This rate rose to 12.26 per cent in November.

Updates for December are awaited but creeping food inflation is the last thing citizens need at a time when the nation is beset by economic stagnation and socio-political upheavals.