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Onion price rise: Government plans three pronged strategy; to release buffer stocks

Onion price rise: Government plans three-pronged strategy; to release buffer stocks

Onion price rise: Government plans three-pronged strategy; to release buffer stocks
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By Timsy Jaipuria  Sept 15, 2020 7:16:51 PM IST (Updated)

With prices of onions on the rise yet again, the government will be closely monitoring the situation and intervene before the situation gets out of hand, sources told CNBC-TV18.

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Last night, the government banned exports of onions with immediate effect, and sources said efforts were on to procure onion seeds in large numbers and also release buffer stocks immediately. Yet another measure being considered is a revision of the Minimum Export Price (MEP), once the export ban is lifted.
The Committee of Secretaries (CoS) headed by Cabinet Secretary took stock of the situation and decided that high wholesale prices in mandis called for an urgent intervention.
“It (onion prices) will be monitored at the highest level; the government will intervene in advance the moment it feels that a crisis could be building up, and not wait for a full-blown crisis,” said a senior official part of the discussions.
Meanwhile, to ensure increased cultivation to meet the demand, government is looking at procuring onion seeds "from all possible sources" to increase cultivation which begins from the last week of October.
“We want to ensure that there is enough onion seed made available to the farmers for the late kharif and rabi season,” another official said.
Sources said that overall, the country was currently facing a 10 percent shortage of onion seeds needed for the rabi season.
Among the five major rabi-onion producing States, Maharashtra is experiencing a shortage of 505 MT onion seeds or 30 percent according to government data, with the Nasik district facing the maximum shortfall, sources said.
“The government will also consider direct procurement of 200 MT of seed from Gujarat and other parts of Maharashtra for immediate supply to Nasik and also to explore possibility of importing onion seeds from onion growing countries,” a source who attended the committee discussion said.
In addition, the government has also asked state owned NAFED to immediately release 500 MT of onions into the market especially, in cities like Mumbai, Delhi, Kolkata, Hyderabad, Ahmedabad, Pune and Indore at mandi rates to meet the demand, the source said.
Officials said that if required, NAFED will be directed to pump in more stocks in the cities with high demand.
Onion prices started rising from first week of September, with the North-Eastern region, Jammu Kashmir and Maharashtra seeing a 50 percent increase, according to an assessment by the Department of Consumer Affairs.
“In Maharashtra alone, the prices of mandi arrivals of onion were 200 percent higher after a 150 percent rise the previous month,” a source said.
However, government also noted that the price rise was not uniform in all the regions of the country.
Government estimates show that during 2019-20, rabi onion produced was 206.05 lakh metric tonnes, which is higher than the estimated production figures of 2017-18 (162 LMT) and 2018-19 (158.28 LMT).
The Finance Ministry, which too is keeping a close watch on the situation highlighted the fact that prices were rising without a significant increase in demand and despite a near 33 percent rise in the production estimates of rabi onion in 2019-20.
Senior Finance Ministry officials are of the view that that onion exporters should not suffer as it would impact India’s share in exports. Also, the government has been pitching for increasing agri-exports as part of its overall strategy to boost exports.
Though the export ban was exercised as an urgent step, sources said the Department of Economic Affairs under the Finance Ministry is in favour of the curbs being relaxed to give relief to exporters.
According to the government data, 3 lakh metric tonnes were exported in August, as compared to 1.26 LMT during the same period last year.
“The Finance Ministry has called for a calibrated approach so that exporters’ don’t suffer unduly,” a source said.
According to a survey by community and consumer platform LocalCircles, 61 households said they paid over Rs 60 for tomato, Rs 30 for potato and Rs 24 for onion. The survey participants were located in over 216 districts of India and belonged to metros or tier 1, tier 2, tier 3 and 4 towns and rural areas as well.
“The fact that 61 percent across the country said that they have paid over Rs 60 last weekend for tomatoes is noteworthy because prices in smaller towns and rural districts is typically half of a Delhi or Bangalore”, said Sachin Taparia, Founder and Chairman of LocalCircles.
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