Onion price spike is partly due to manipulation by traders: Consumer Affairs Secretary

All ingredients for making Diwali sweets are available in plenty, says Rohit Kumar Singh; adds that export curbs and other recent measures are stabilising onion prices, though pulses remain expensive

Updated - November 05, 2023 08:45 am IST

Published - November 05, 2023 03:42 am IST - NEW DELHI

Rohit Kumar Singh, Secretary, Department of Consumer Affairs.

Rohit Kumar Singh, Secretary, Department of Consumer Affairs. | Photo Credit: SUSHIL KUMAR VERMA

Ahead of the festival season and Assembly elections in five States, the rising prices of several essential items are creating a headache for BJP-ruled governments. For instance, onion prices, according to government data, are more than double last year’s rates. The Centre has taken several steps to combat this, including export curbs on onions, foodgrains and sugar.

Union Consumer Affairs Secretary Rohit Kumar Singh maintains a watch on the prices of almost all essential grocery items, vegetables and milk products on a daily basis through the price monitoring cell of his Ministry. In an interview with The Hindu, Mr. Singh said that recent measures have started showing results and prices are becoming more stable. Edited excerpts:

Onion prices have increased again and the festival season is here. What are the reasons for this hike and what steps have you taken to curb it?

Prices are governed by availability. Availability is driven by our domestic prices minus our exports of onions. Export is driven by international prices and international demand, which is mostly from countries such as Bangladesh, Sri Lanka, Malaysia, Qatar, and Indonesia. Production has been good, but onion is a perishable item. 70% of the onions are from rabi season and 30% from kharif. We cannot store rabi onions beyond four-five months. The kharif harvest is usually delayed and the supply comes down in these months. The traders take advantage of the situation in this little period. It is not just demand and supply, it is also manipulation by traders. Not all traders are bad, but some are taking advantage of this situation. It is not hoarding, it is speculation — spreading news of shortage. There is no instance of deliberate hoarding.

To check this, we increased the buffer stock of onions to five lakh metric tonnes. If the government has enough buffer stock, the market will be very wary. It will also help the farmers to get the best price. We intervened in both retail and wholesale markets. We check the prices at 550 locations on a daily basis. This database reflects the entire country. On the retail front, we are selling onions at around a thousand points in 100 cities across the country at a rate of about ₹25 for a kilogram. These measures have an impact on the prices.

The prices started going up in mid-October and one reason was excess exports to Bangladesh. We checked that by imposing 40% export duty, but it was not working. Then, we implemented a minimum export price by making onion trade unviable in the countries where exports were taking place.

The Centre has been maintaining that controlling prices of tomatoes, onions and potatoes (TOP) is a “top” priority. But critics say that this has policy failed on the ground...

The volatility in prices has nothing to do with policies. It is how these commodities behave and it is how they are produced at different sub geographies in the country at different points in time, and how is the perishability of these commodities. A sudden variation in terms of rains are susceptible to these crops. But we are intervening through market intervention scheme to procure these products. Also, when the prices go high — up to ₹200 a kilogram for tomatoes, it was unprecedented, and we intervened by picking up the transportation cost. Such direct intervention in retail sales were for the first time.

There are concerns about the prices of wheat, rice, pulses, and edible oils. How do you look at this?

We have taken adequate care to stop hoarding of foodgrains. There are stock limits on wheat, pulses, and other commodities. Edible oil is dependant on imports. Now, international prices are down and it is helping the consumers. If prices crash too much, farmers will not be incentivised. So we are trying to bring a balance between the interests of farmers and interests of consumers. Secretaries of four departments (Agriculture, Commerce, Food and Consumer Affairs) meet every week to ensure this balance.

On pulses, there is a little concern on the prices of tur dal. Last year, production was less and there is a gap between consumption and production. So we had to import tur from Myanmar and East African countries. We are getting supplies, but prices are high though not increasing. We have to bring it down. We are hopeful of increasing the production of tur in this season.

Diwali is a festival of sweets too. After the lumpy skin disease outbreak among cattle, there was an issue of rising milk prices, and a decrease in the production of milk, ghee, and butter. Sugar also faces import restrictions. How about these products?

There is absolutely no concern about the availability of milk, ghee, butter, and sugar. For example, for making laddus, we have chickpea available in excess. Ghee is available and sugar is also available. There is no worry on that.

Onions, rice, sugarcane are all cash crops for many farmers. So is restricting exports impacting the rural economy and the purchasing capacity of farmers and agriculture workers?

Absolutely not. Governments will have to prioritise domestic consumption. Exports can be done only after satisfying the local environment. We have trade relations and export commitments, but only if products are available. Availability and affordability is the fundamental principle of the government.

Domestic supplies are primary. Farmers are not selling it in distress. They are getting reasonable prices and profit. But they are not making a killing, which is probably possible because of the geopolitical conflicts. They may not get that undue benefit because of the government’s approach of protecting the domestic interests. On a case-to-case basis, we respect the demands from other countries too for the products from India.

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