New Delhi: Onion prices are hurting consumers’ pockets during the Monsoon season with rates rising by as much as 50 per cent in several parts of the country. To be sure, onion is grown by farmers across India led by farmers in Maharashtra. However, the onset of the Monsoon has posed a challenge to the preservation and transportation of this commodity, adding to its price.
How Centre is trying to control onion prices
The Centre has intervened to curb the onion price rise by purchasing the humble tuber from farmers in Maharashtra at elevated rates of Rs 29.5 per kg, compared to the RS 16.93 per kg paid during the onion buying season. This marks a 74 per cent rise in the price paid by the government to procure onions from farmers.
The Centre has expanded its overall onion purchase budget to Rs 1,500 crore this year from Rs 1,200 crore during the year-ago period.
Onion prices have doubled from the past year to Rs 57 per kg in retail and Rs 3,050 per quintal from Rs 1,800 per quintal last month, the Mint reported.
To be sure, there is more to the expansion of the onion purchase budget this year. With the Maharashtra state elections due this year, it will be unwise to keep onion farmers unhappy. The Centre had imposed an export duty in Indian onion produce to ensure domestic availability of the key commodity, to the chagrin of cultivators, who had to forego higher price realisation for the greater good.
Farmers are being paid directly into their accounts for the onion purchase by the government which takes place through its arms, namely, the National Agricultural Cooperative Marketing Federation of India (NAFED) and National Cooperative Consumers’ Federation Of India (NCCF). The 2 government arms also emphasised the importance of expanding onion cultivation, which led to a rise in beneficiary farmer numbers to 10,000 this year from 6,100 last year.
Why are onion prices important in India?
Onions have a special place in the pecking order of vegetables in India sine they are consumed widely and across classes, but most importantly by the poorest of the poor. The affordable commodity, called the humble tuber, can change the fortunes of governments if their price rises out of reach of the poorest in India. Governments maintain a delicate balance when it comes to ensuring the adequate supply of this commodity while ensuring adequate compensation to onion cultivators.
Overall, vegetable prices have been a pain point for the disinflation trajectory in India, putting a spanner in the works of the RBI’s disinflation calculations. The government plans to buy 5 lakh tonnes of onion this year to ensure adequate availability and curb price rise. It will use the buffer accrued via direct purchase from the farmers to control price rise. The Centre has so far purchased 2 lakh tonnes of onions.
Onion prices are likely to remain in check as the government has stepped up direct purchase of the humble tuber from farmers. Know the Centre’s purchase target and budget for buying onions this year. Biz News Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
