An essential step to contain the ballooning price of onions will be welcomed throughout the country… save perhaps by traders. Having said that, it shall not be easy for the Centre to dispel the dominant impression that the twin measures have been announced horribly late in the day. Manipulation of the trade in an essential commodity over the past several months largely accounts for the crippling shortage and the almost unaffordable rates. There are at least three facets to Sunday’s announcement.
One is that the export of onions will be banned till 30 November and with “immediate effect”, to summon the jargon of the Directorate- General of Foreign Trade. This isn’t exactly policydriven protectionism of the domestic market that is now contending with a sharp slump in sales. The decision is electorally driven. Significant too must be the date ~ till Assembly elections are over in Haryana and Maharashtra. Ergo, it is hard not to wonder whether electoral considerations have influenced the announcement. It bears recall that as often as not, the price of onions has dented the fortunes of the ruling party.
It was so unaffordable as to lead to the defeat of the BJP government in Delhi in 1998. The onshore supplies will be stabilised if offshore delivery is put on hold. This is the truism of economics that was overshadowed amidst the recent high voltage verbiage in New York. The ban on export is aimed at increasing the availability of onions in the retail sector. Farmers and hoarders are now expected to “accelerate stock liquidation” and bring down the price of this essential commodity. The other aspect is that a limit has been prescribed for retaining stocks. Yet another is the proposed crackdown on hoarders.
The conclusion is inescapable that as with the seasonal fiddle with potatoes ~ another essential commodity ~ the onion has now been caught in the vortex of a deftly calibrated scam involving the farmers and wholesale/ retail traders, with the Ministry of Food and Civil Supplies winking at the irregularities. However late in the day, the Government of India has prescribed the formula; it now devolves on the states to execute the blueprint with urgent despatch. Hitherto, the Centre would delegate to the states the power to fix the stocks under the Essential Commodities Act.
This time, however, the Union Ministry of Food and Civil Supplies has let it be known that it shall determine the terms of engagement. This, it is hoped, will militate against the involvement of mahajans at the state level. No less a determinant as been the report of an official team that visited Nasik, an onion-producing region. The bitter irony being that whereas there was no dearth of supply in the wholesale segment, it is the retail market that has been deprived. This succinctly is the bitter irony of the onion trade. In a perilously skewed fashion, the stakeholders know their onions.