Onions Make Everyone Cry, As Government Runs For Cover

Posted on December 29, 2010 in Business and Economy

By Anwesha Bose:

This story is a strange case of the government that is caught in a tight spot not because of the opposition parties or the multitude of Scams but because of a simple veggie- The Onion.

One of the most essential components in food, both for the prince and the pauper, sky rocketing prices of onion in the recent week has made the common man sink deeper into its empty pockets.

It’s generally during the winters that prices of vegetables come down considerably due to the good production of the kharif crops in India. But this time the scenario is completely different. Onion, which generally are sold at a maximum of Rs. 20 to Rs. 30 a kg, is now selling, if at all available, in the markets at a whopping Rs 75-80/kg.

So really the question is that what went wrong with the onion supply? Who is to be blamed for the fiasco? There are primarily two reasons why this situation occurred and in both these cases, the BCCI president… oops!… our Agricultural Minister- Mr Sharad Pawar and the Agricultural Ministry is to be blamed. The reasons are, namely, unseasonal rains and export licenses.

While Pawar cannot be faulted for the unseasonal rain that struck Maharashtra, Gujarat and Rajasthan just while the crops were been harvested, yet the authorities in charge did nothing to prevent or mitigate the crisis which was evidently on its way. The entire month of November was wasted even though the loss in crop production -35% in Maharashtra, 50% in Gujarat, 25% in Rajasthan and 40% in MP was already measured by late October.

Of course it does not take rocket science to understand the basic concept of demand and supply. The commodity was already suffering a low supply yet export licenses were constantly issued by the ministry. Lack of supply sent the prices shooting northward. While all the onion went out of the country to be chopped in a foreign state, people of our country were left to nothing. For once it seemed that both the rich and poor were into a cause together!

According to the statistics, export licenses issued in form of “No objection certificates” were 35 times than the numbers issued in the month of October, despite clear warnings of erratic weather condition by the National Horticultural Research and Development Foundation (NHRDF).

India has one of the best weather forecasting and warning system due to the series of remote sensing satellites launched by ISRO, however this time the Agricultural ministry did not call for the data or simply ignored it.

Ironically the exported onions were sent to Pakistan, where the exporters received it at Rs 15-20/kg; but now, they are laughing all the way when they are exporting the same to India at Rs 60/kg.

Currently the government has stopped the export of Onions, but this veggie is known to have toppled governments. In 1998, the BJP led NDA government lost terribly in polls in 4 states due to the excessive onion prices both at whole and retail markets. That year, they too banned export but it was too late for make any difference.

Let’s see if history repeats itself with UPA this time, because the aam aadmi is annoyed, especially after the recession and double-digit food price inflation in which the government was not proactive. Also the people will be questioning the functionality of the Agriculture Ministry which is rather infamous for its inefficiency.

So no tall promises and no war of words. What we want is a simple meal without digging too deep into the graves of corruption.

Image courtesy.