The Nation: Inflation; Not knowing their Onions

India Today
October 19,1998

INFLATION
Not Knowing their Onions

As onion prices hit the roof and people across the country suffer, the government has no solution to tackle the crisis.

By Sayantan Chakravarty

Many wait in Delhi for hours to buy onions. There's nothing comical about a daylight robbery. But when dacoits made off with a truckload of merchandise from a wholesaler's godown in Muzaffarnagar district of western Uttar Pradesh last month, there were titters in the locality. For their booty was nothing but a tonne of the pungent, bulbous root that is so much a part of Indian cooking. Indeed, the humble onion is today anything but a steal. Onion prices, which were around Rs 6 a kg in the first week of June, skyrocketed to an all-time high of Rs 50 last week. Traders in Delhi's Azadpur wholesale market say prices may rise to Rs 70-80 in another fortnight.

The situation is particularly bleak in non-producing areas like Delhi. The capital consumes about 150 tonnes of onions daily. "There is no chance of the prices falling immediately, not at least for another two weeks," says Sudhir Mahajan, secretary of the Agriculture Produce Marketing Committee, the body that procures vegetables on behalf of the state Government and sells them to wholesalers at the Azadpur market.

As prices spiral upwards, the Delhi Government, already beset with a bagful of problems with the assembly elections less than six weeks away, can ill-afford to remain silent. It arranged to sell 15 tonnes of onions daily at Rs 10 a kg through the Super Bazar (48 outlets) and another 35 tonnes through mobile outlets run by sundry agencies like the Kendriya Bhandar. It also activated 230 outlets of the Mother Dairy to sell onions at Rs 15 a kg. But these subsidised onions were not enough. Despite the rationing (initially 2 kg and later 1 kg per person), most people had to return home empty-handed after hours of waiting in serpentine queues. "We are doing our best to help out but we can at best supply onions to about 15,000 people," says Super Bazar Chairman S.S. Dhuri. At some places, violence broke out when stocks finished.

Elsewhere in the country, the position is only a shade better. In Mumbai, when prices hit a high of Rs 30 a kg, the Shiv Sena typically decided to take matters into its own hands. Sainiks sold onions at prices lower than the market rate, providing some relief to the people. This despite the fact that Maharashtra is the "onion bowl" of India, contributing 27 per cent of the country's total production of five million tonnes. Maharashtra Civil Supplies Minister Haribhau Badage of the Shiv Sena, however, dismisses the crisis as a "temporary phase". In Lucknow, onion prices have jumped from Rs 20 a kg in the first week of September to Rs 42 a kg now.

The crisis has its roots in untimely rain in Maharashtra and Gujarat during August and September. While heavy rains destroyed the crop in these states, in Rajasthan and Haryana, the other major onion producing states, high temperatures during May and June ruined it. It is estimated that this year the total onion production will shrink by about 30 per cent. The problem is only going to get worse because existing onion stocks are not expected to last beyond October 15 and the new crop will not hit the market before December.

This raises a pertinent question: Why didn't the Central Government react in time to contain the crisis? Unseasonal rain last November had prevented farmers from sowing onions. This year too the Agriculture Ministry was aware that the monsoons would be delayed. Yet no plans were drawn up to import onions. "Had the Centre acted in time, the shortage could have been overcome and the prices would not have risen so drastically," asserts Bihar Food Supplies Minister Ram Lakhan Mahato. With onions selling at Rs 50 a kg in Patna, Mahato finds himself in an unenviable position.

Many feel that had the Government foreseen the shortage and imported onions, the resultant spiralling of prices could have been averted. The sluggishness with which the Government reacted to the exigency was alarming. Says Rajinder Sharma, general secretary of the Congress-backed Potato and Onion Merchants Union at the Azadpur market: "The Government has no contingency plans to deal with the situation. There have been no imports to date and if this continues prices will touch Rs 70-80 a kg in the next two weeks."

Delhi Food Minister Poornima Sethi dismisses this as balderdash. "It is a scare that the Congress party is trying to create. We cannot produce onions from out of the blue. If crops in the country are bad we must accept the fact," she says.

As the crisis deepens, it is becoming clear that the Government is in no position to tackle the shortage. Last month, N.K. Singh, secretary in the Prime Minister's Office, held a meeting with senior officials of the agriculture and finance ministries. It was decided that 15,000 tonnes of onions would be imported from Dubai and Iran. But though NAFED has been given permission to import, it will be a while before the first consignment of onions reaches Indian shores. Chairman Ajeet Kumar Singh says that NAFED is still awaiting the Commerce Ministry's nod for waiving the 15 per cent import duty. However, Commerce Secretary R. Prabhu asserts that the waiver has already been granted. The Delhi Government too is negotiating to import onions from Dubai and Indonesia but hasn't decided the quantity.

As the buck gets passed on, the onion shortage is reminiscent of the sugar scam of 1994 when the Congress government did not take steps to import sugar to tide over an imminent shortage due to a sharp drop in sugarcane production. It seems that history is repeating itself.

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