No relief from high onion prices any time soon; govt steps not enough

Onion price went as high as Rs 100 per kg in the last few days.

Soaring onion price will continue to upset household budgets till at least the dawn of the next year, as the government moves — bulk imports, and ban on exports — will at best check onion price from rising further, and not actually bring it down. The end consumer prices will not show a cooling off until the new year as fresh produce is awaited from Gujarat. “Next stock starts to come from Gujarat in December. That will incrementally ease onion prices,” Sreejith Balasubramanian, an economist at IDFC AMC, told Financial Express Online. Since the next stock will arrive by next month, the onion prices are likely to stabilise by mid-January, he added.

New year to bring cheers

“It is quite likely that people will have another few weeks or a month of pain,” he said. However, it’s difficult to estimate the range of expected fall in onion price as of now due to several factors. Onion price went as high as Rs 100 per kg in the last few days. The government has stepped in with a combination of moves to keep onion price in check. The PSU trading company MMTC has contracted to import about 6,100 tonnes of onion to cater to domestic supply and ease prices, PTI reported.

“Import is just one of the measures. There is an export ban already in place and there are stock limits to avoid hoarding,” Sreejith Balasubramanian said, adding that all of these factors combined have been keeping the onion prices in check. “Had the government not deployed those measures, some increase would have been there. But, while the onion rates have not breached the Rs 100 per kg price, they are still not within the comfortable level,” he said.

Govt measures won’t hold in long run

Fresh stock is needed and even while the multitudes of measures will continue. “Stock from earlier season is being used for now. January to March is the late Kharif harvest season. The beginning of the season is when some relief could be seen,” he said. 

Can these measures sustain the onion price inflation for long? “Long term impact of such ad-hoc measures is debatable in the long run,” Sreejith Balasubramanian said. The central government is also selling imported onions at Rs 52-55/kg (ex-Mumbai) and around Rs 60/kg (ex-Delhi) to states like Andhra Pradesh, West Bengal, Odisha, Kerala and Sikkim, as these states have placed the order with the Centre for supply of 2,265 tonne of onions.

• The story was originally published on www.financialexpress.com on 26 November, 2019.