Curbs on export of onions, potatoes to combat inflation

The Centre on Tuesday announced steps to check rising food prices, restricting export of onions and potatoes, and asking States to crack down on hoarders.

A day after official data showed inflation running at a five-month high, Finance Minister Arun Jaitley held an emergency meeting with Commerce Minister Nirmala Sitharaman, Food Minister Ram Vilas Paswan, Agriculture Minister Radha Mohan Singh and top officials, including Nripendra Misra, Principal Secretary to Prime Minister Narendra Modi.

Of the 22 commodities being actively monitored by the government, four or five have shown a spike in prices, Mr. Jaitley said. “The government won’t allow anyone to exploit apprehensions of a weak monsoon. States are being advised to crack down on hoarders.” Among the export curbs, the government imposed a minimum export price of $300 per tonne on onions.

‘Onion shortage due to hoarding, mismanagement’

The Union Agriculture Ministry has asked States to take stringent action against hoarders as prices of onions, potatoes and tomatoes continue to rise.

“Production of onions, potatoes and tomatoes is higher this year than last year. A shortfall in supply is either due to hoarding or mismanagement by onion-producing States,” Union Agriculture Minister Radha Mohan Singh told The Hindu.

A sluggish south-west monsoon and rising inflation on account of food and fuel prices have alarmed the government. Onion prices have shot up to about Rs. 35 from Rs. 15 a kg a fortnight ago. The prices of potatoes and tomatoes have also spiralled.

The spike in inflation came even before the effects of the projected deficient rains and possible Iraq-related hike in global oil prices began to kick in.

“The rise in prices of food articles can also be attributed to withholding of stocks on account of apprehension of a weak monsoon,” Union Finance Minister Arun Jaitley had posted on Facebook late on Monday. “The State Government(s) should take effective steps to ensure that speculative hoarding is discouraged.”

Over the weekend, Prime Minister Narendra Modi warned that “bitter medicine” was needed to put India’s economy back on track, without giving details.

There is an urgency in the government circles to tackle the situation as elections are round the corner in Maharashtra, Punjab, Jammu and Kashmir and Jharkhand and possibly Delhi. Last year, just before the Assembly elections in Delhi, onion prices shot up to Rs. 100 per kg taking down the Congress government.

Mr. Radha Mohan Singh attended a meeting convened by Mr. Jaitley to review measures for containing inflation. Earlier, the Prime Minister’s Office also convened a meeting with departments concerned on “measures taken to tackle food inflation.”

Onion prices have also started rising as supplies have been hit due to a strike by loaders in Nasik in Maharashtra. Union Agriculture Secretary Ashish Bahuguna on Tuesday spoke to his counterpart in Maharashtra requesting him to prevent hoarding and resolve the dispute between strikers and the Agriculture Produce Marketing Committee.

Onion production this year is 192.98 lakh tonnes as against 168.13 lakh tonnes in 2012-13. Potato output is 46.6 lakh tonnes compared to 45.3 lakh tonnes while tomato production is 191.03 lakh tonnes this year against 182.27 lakh tonnes. Last year, 13.58 lakh tonnes of onion were exported as against 18.22 lakh tonnes the previous year.

Mr. Singh said onion prices shot up by 29 per cent in Mumbai and 13 per cent in Delhi within a week due to shortage in mandi arrivals. “However, the steps taken by the government will bring down the prices,” he said.

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