With onion prices showing no signs of decline, and with an increase in milk price, as well as overall increase in the prices of vegetables and fruits, not to talk of sweets and dry fruits, Diwali this year is likely to be bitter and expensive for many people.
The period between July and October-end is usually a lean season for onion when supplies are met from rabi stocks. This year, however, even as exports continued, stored stocks have depleted.
The kharif crop in Karnataka and Maharashtra is expected only in November second week. The crop has not yet been harvested in Rajasthan. Standing crop in Madhya Pradesh and Gujarat has been affected by “return rain.” There, onion will be harvested only after water drains out and the soil dries up.
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Inflation, as measured by the wholesale price index, jumped to a seven-month high of 6.46 per cent in September with food inflation, led by onion prices, at 18.40 per cent.
“Onion shortage is temporary,” Agriculture Minister Sharad Pawar told journalists on Thursday. “It will ease after two to three weeks. The production will be normal or even above normal and the prices will fall when the new crop arrives.”
“Already the prices have dropped to Rs. 4200 a quintal in Pune and to Rs. 4000 in Nashik wholesale markets,” he told
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“If wholesale farmers are getting Rs. 40 to Rs. 45 a kg in Nashik and Pune, I don’t understand why it should sell at Rs. 90 in retail here [New Delhi],” he said.
Extremely worried about the situation, Delhi Chief Minister Sheila Dikshit, who faces elections next month, met Mr. Pawar and Minister of State for Food K.V. Thomas. The situation, she said, was “serious.”
“We will write to the Election Commission to allow us to restart sale of onion through mobile vans [which was stopped as it amounted to a violation of model code of conduct].”
She said that she had spoken to Maharashtra Chief Minister Prithviraj Chavan and despatched teams to Pune and Nashik to make direct purchases from farmers to control the spiralling prices.
Appeal
Saying that traders and hoarders were taking advantage of the situation, the Chief Minister appealed to “black marketers and hoarders” to cooperate with the government and bring out stocks of onion to ease supplies. “We have also asked Nafed to improve supplies on a no-profit-no-loss basis.”
Mr. Thomas said Nafed had offered to store the requirement of States from the bumper rabi crop, but none responded, including the Delhi government. Storage involved costs, which the State governments did not want to incur.
With Nafed having floated a tender for import of onion, which may arrive around the same time as domestic harvest, the government is worried that farmers will complain in the next one or two months about crash in prices.
Supply-side constraint
Chairman of the Prime Minister’s Economic Advisory Council C. Rangarajan said supply-side constraint was responsible for the steep hike in onion and other vegetable prices and may have a temporary effect on inflation.