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Onion Catch-Up

 

Nearly 15 years ago, the BJP was wiped out by spiraling onion prices. Now it is the Congress’s turn to be worried.
KS NARAYANAN | Issue Dated: November 1, 2013, New Delhi
Tags : Onion Deals Online | Groupon India | Onion Heists | Onion Bank Deposits | Shiela Dikshit | UPA II | Sharad Pawar | Indira Gandhi | NAFED | CCI | Ashok Chawla | Ashok Gehlot |
 

Skyrocketing onion prices have spawned off a spate of off-beat ideas. Consider these:-
•Onion Deals Online- Groupon India offered to sell onions to its customers at Rs 9 a kilo, in response to the mounting onion prices - funnily but unsurprisingly, this offer has caused the site to crash! Also, it was the first time Groupon India had a deal on onions.
• Onion Heists –In a startling new case of robbery, three armed men stopped a truck carrying onions and bolted away with the vehicle at Shahpura village on the Jaipur-Delhi highway.
• Onion Bank Deposits – To protest rising onion prices, BJP MLA from Kanpur Satish Mahana deposited onions and tomatoes in the Allahabad Bank. Allahabad Bank manager N.C Sharma confirmed the deposit of onions and tomatoes by Satish Mahana and said that his demand for a locker will be granted once bank formalities are completed.
• A housewife tweet which reads: “Latest matrimonial trend in India: Jain girls are in demand because they know how to cook without onions.”

Nobody understands the sting of onions better than Shiela Dikshit, the three-time chief minister of Delhi which enabled the Congress to ride to power in 1998.

Now 15 years later, history is repeating itself as sky rocketing price of onions threatens to sting the feisty Delhi CM and her party. The main question is this: can the Congress-led UPA II tackle this onion blow in the run up to the December 4 assembly elections? Or will onions kill the political hope of the already battered image of a Congress government ridden by scams, decision paralysis, and high crime against women and jobless growth.

Experts have an interesting poser: how did India, the second largest producer of onions after China, land itself in this mess?
India’s onion output stood at 175.11 lakh tonnes (LT) in the crop year 2011-12, while in the year 2012-13 production is estimated at 166.55 LT (provisional).

Union Agriculture Minister Sharad Pawar said in a written reply in the Lok Sabha that onion production in the country is estimated to fall by 5 per cent in the crop year 2012-13 (June-May). Does India produce enough to meet its domestic demand and for exports to help foreign exchange? "Onions are regarded as a highly export oriented crop and earn valuable foreign exchange for the country. Though India produces a significant quantity, it is not regular and sufficient enough to meet the demands for both domestic requirement and exports", point out RP Gupta of the National Horticultural Research and Development Foundation.

During the last few months, India has witnessed a huge surge in prices, a four to five fold increase from a mere Rs 20 to 100 per kg! This was not only limited to National Capital Region alone but across the entire country. High onion price is certainly the central piece of household woes but prices of other veggies too are not too far behind. (See Box).

The rise in inflation was almost entirely on account of higher food prices, particularly vegetables. Wholesale food inflation rose to 18.4% in September from 6.04% in April. In the retail index, food and beverage inflation was 11.44% in September, up from 11.06% in August. Inflation in onions remained in triple digits for the fourth consecutive month, accelerating to 323% against 245% last month. Vegetable prices were up 89.37% in September from a year ago.

Sheila Dixit rode to power in 1998 on an onion price wave, in turn emulating Indira Gandhi’s return to the centre after 1980 when she would wave garlands of onions at political rallies to upstage the bickering Janta Party. In 1980, she made an appearance at election rallies with a string of onions with the message that a government that had failed to manage onion prices could hardly manage the country’s affairs.

In 1998, the BJP paid a political price for not being able to fathom popular anger over the sky-rocketing prices of onions. As the rates touched Rs 60 a kilo, BJP was voted out of power in the assembly polls in Rajasthan and Delhi, where Sushma Swaraj led the government. In an effort to unseat her ace political rival, the BJP is making the most of high food inflation. Similarly Aam Aadmi Party (AAP) spearheaded by Magsaysay award winner and anti-corruption crusader Arvind Kejriwal is gunning for the ruling party. To this Shiela has issued a clarion call to her opponents not to gain political mileage from onions when people are suffering. Her justification is Delhi is not an agriculture state and hence the price is not dependent on the state government.

It may not be as simple though. As the opposition bayed for Dixit’s blood, the government exported nearly 30,000 tonnes of onion bringing down onion prices from Rs 80 to Rs 70 a kilo.

The export came despite a supply crunch in the market at that time. In fact, the government had imposed a minimum export price of $ 650 per tonne in August to restrict shipments in a bid to rein in prices. But despite previous experience and an impending disaster it did not put a ban on exports.

Interestingly India through the National Agricultural Cooperative Marketing Federation of India (NAFED) floated tenders in August for importing onions from its rivals China, Pakistan and sanction-hit Iran.

Last year, a study instituted by Competition Commission of India (CCI) found clear imperfections, including cartelisation and hoarding, which impact the price of onions. Now the CCI had initiated three probes into the manipulation of onion prices. In a recent report titled 1Competitive Assessment of Onion Markets in India', researchers put the blame on heavy cartelisation. The CCI is undertaking visits to Maharashtra, Karnataka, Gujarat and Andhra Pradesh, the major onion-producing states to get a better understanding of the market as they try to determine if cartelisation is what is causing the havoc.

In September, CCI Chairman Ashok Chawla said they were examining whether the issue of rising prices needs investigation. "We will see how it plays out further. We will see whether it warrants an examination or not. This is again an issue on which the Commission had spent some time in the past...and come to a conclusion that the markets don't seem to be functioning very well. But there was no evidence of cartelisation," he said.

Top policy makers are unfazed by public suffering. Union Agriculture Minister Sharad Pawar indicated last week on the sidelines of the Eighth National Conference on Krishi Vigyan Kendras 2013, that onion prices might remain high for two to three weeks, and asked states to crack down on hoarders to help tame the rates. Asked whether he meant that the prices would come down in the next two to three weeks, he said: “No, no. I am not an astrologer. But I know something about crops. This situation will continue for the next two to three weeks.’’

With less than four weeks left for the December 4 assembly elections, Shiela Dikshit is obviously expecting a miracle to sell onions at affordable price to Delhites. She has requested Pawar to direct NAFED to make available adequate quantities on a ‘no profit no loss’ basis so that prices come down and hopefully, peoples' anger contained.

To make up for the loss of time and image, Dixit has said her government has approached the Election Commission to sell onion at reasonable prices. “The model code of conduct restricts the government from going ahead with the initiative. The situation is serious,” the Delhi chief minister said. Delhi government officials say the Election Commission is examining their proposal and some action could be expected.

But markets believe prices may start stabilising only by mid-November. Unfortunately for the likes of Sheila Dixit and Ashok Gehlot, it may be too little and too late. They would have been much happier if the stability could have come a little earlier; unfortunately that is not to be.

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Issue Dated: Feb 5, 2017