Blaming hoarders for "abnormal" rise in onion prices, the Centre has asked State Governments to act against speculators and impose stockholding limit on traders to control rates. The Centre has issued notification on Tuesday, allowing State Governments to impose onion stock limits and undertake various measures like de-hoarding operations, action against speculators and profiteers. This has been necessitated due to the abnormal rise in prices of onions in recent weeks particularly from July end of this year onwards, though the production and supply of onions in the market is better than last year during the same period. Onions are being sold at Rs 40-45 per kg in the national capital.
Onion prices have shot up since July due to depleting old stocks and concerns about this year's output as kharif sowing area is down by 20-30 per cent. Onion is being sold in the national capital is between Rs 40-50 a kg since July due to short supply from onion producing States. Onion is sold at Rs 50/kg in Mumbai, Rs 48/kg in Kolkata and Rs 40/kg in Chennai. The Government claims that as per all India average retail price, the prices have increased from Rs 15 per kg to Rs 28.94 per kg. Till July end, onion was sold at Rs 80 a kg in Delhi, Mumbai, Bangaluru and Chennai.
Officials of Ministry of Agriculture say that prices of agricultural commodities usually increase around this time on account of supply disruptions due to rain and a sudden spurt in demand from stockists, ahead of a festive season including Diwali and Dussehra celebrations. This time, short supply has aggravated the situation which led to abnormal rise of the onion after tomatoes.
"After examination of all the circumstances, Government has inferred that there are some other reasons than shortage of onions, contributing to the abnormal price rise of onions like hoarding, speculation etc.
Therefore the State Governments were required to be enabled to take action against those traders who are engaged in speculative trading, hoarding and profiteering in onions. The measure is expected to bring the prices of onions down to a reasonable level to give an immediate relief to the consumers,"
said officials.
Onion production in India is carried out mostly by small and marginal farmers-and hence fiscally incapable of manipulating market supplies.
The crop is grown thrice a year: rabi (March-June), kharif (October-December) and late kharif (January-March). The rabi crop, harvested between April and June, accounts for 60-65% of the annual production and sustains consumers till October-November. Maharashtra and Karnataka together account for more than half of the country’s onion production. Karnataka produces around 2.7 million tonnes (mt) out of India's total annual onion output of 20-21 mt, making it the third largest after Maharashtra (6.5 mt) and Madhya Pradesh (2.8 mt).
Recently, Food Minister Ram Vilas Paswan had also written to the Commerce Ministry seeking imposition of Minimum Export Price (MEP) of USD 450 per tonne on onion to curb outbound shipments and withdrawal of incentives given to traders for its export. Onion MEP was scrapped in December 2015. The MEP is the minimum rate below which exports cannot be undertaken.