Blaming hoarders for "abnormal" rise in onion prices, the Centre today asked states to act against speculators and impose stockholding limit on traders to control rates.
Onions are being sold at Rs 38 per kg in the national capital.
The Food Ministry said the Centre has taken a decision to "enable the states/UTs to impose control measures on traders/ dealers of onion to ensure adequate availability of essential commodity at reasonable prices".
The ministry notified this decision on August 25.
"States may now impose stock limits on onions and undertake various measures like de-hoarding operations, action against speculators and profiteers," an official statement said.
This step has been taken due to "abnormal rise in prices of onions in recent weeks particularly from July end of this year onwards", it added.
The ministry said that the production and supply of onions in the market is better than last year during the same period.
As per all India average retail price, onion rates have increased from Rs 15 per kg to Rs 28.94. In the metros, the rise has been even steeper and the kitchen staple is being sold at Rs 31 per kg in Chennai, Rs 38 in Delhi, Rs 40 in Kolkata and Rs 33 in Mumbai.
"After examination of all the circumstances, government has inferred that there are some other reasons than shortage of onions, contributing to the abnormal price rise of onions like hoarding, speculation," the ministry said.
Therefore, it said that it was necessary to enable states/UTs to take action against those traders who are engaged in speculative trading, hoarding and profiteering.
"The measure is expected to bring the prices of onions down to a reasonable level to give an immediate relief to the consumers," the statement said.
Onion prices have shot up in the last few weeks due to depleting old stocks and concerns about this year's output as kharif sowing area is down by 20-30 per cent.
Recently, Food Minister Ram Vilas Paswan had also written to the Commerce Ministry seeking imposition of Minimum Export Price (MEP) of USD 450 per tonne on onion to curb outbound shipments and withdrawal of incentives given to traders for its export.
Onion MEP was scrapped in December 2015. The MEP is the minimum rate below which exports cannot be undertaken.
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