Rising onion prices may add to govt's headache

Unknown to the UPA government, which is crying itself hoarse about the benefits of a nuclear deal with the US, rising onion prices may arm the opposition with a potent weapon capable of reducing the ruling coalition to tears.

Onion prices, which were blamed for BJP's rout in assembly elections to Delhi and Rajasthan in 1998 and threatened to rock the Sheila Dikshit government in Delhi early this year, has risen 11 per cent in the past one week in wholesale markets with production dipping across the country.

"The cost of onion has reached Rs 20 a kg now which is too high to buy daily," said Mamta, a homemaker and resident of the national capital.

The all-India average price of onion in the wholesale market went up to Rs 1,070 a quintal on August 18 against Rs 962 per quintal on August 13, according to Nashik-based National Horticultural Research and Development Foundation.

"The main reason for the increase is less arrival of onion in the market," wholesale trader Sher Singh at the Azadpur Mandi said, adding that there was no stock in the major mandis of Maharashtra.

The arrivals of onions at 36 major markets across the country declined to 100.14 lakh tonnes last Friday from 120.76 lakh tonnes recorded August 13.

The onion arrivals in Delhi, one of the largest consuming centre of the country, dipped to about 600 tonnes yesterday from 1,050 tonnes at the beginning of the last week mainly due to surge in onion rates in the southern parts of the country, where the supplies are also going from the producing areas, traders said.

Delhi Chief Minister Sheila Dikshit had in February this year sought a ban on export of the edible bulbs through NAFED as part of efforts to ease prices.

"On Saturday (Aug 18), onions sold at Rs 15-16 per kg in the wholesale market here which is likely to firm up to Rs 17-18 a kg in a day or two," Singh said.

Traders also said onion prices may further go up if rains hit the Kolhapur and Bellary regions, from where Delhi gets its supply.

At the Lasalgaon mandi in Maharashtra, a major growing area, onion arrival dipped to 800 tonnes on August 17 from 1,546 tonnes of August 13 while at another centre Pimpalgaon it came down to 657 tonnes from 843 tonnes.

Experts said the decline in arrival is because of liquidity in stocks at the farmers' level. India's onion production was hit in Maharashtra last year as many farmers shifted to sugarcane.

Government agencies had raised the minimum export price of onion this month by $20 per tonne to $345 per tonne mainly to discourage export and increase the domestic availability of the essential commodity.