With a spike in onion prices, the central government on Tuesday rolled back the 10 per cent subsidy it had granted on its export. The subsidy was announced on December 28, 2018, under the Merchandise Export from India Scheme (MEIS) after a drastic fall in onion prices had rocked the cultivators.
Over the last few weeks, the average traded price of onion across wholesale markets in Nashik — the onion hub of the country — has seen a steady spike. On Monday, the bulb’s average traded price at wholesale markets of Lasalgaon in Niphad taluka of the district was Rs 1,301 per quintal. Retail prices in markets like Pune and Mumbai, meanwhile, have crossed Rs 20 per kg over the last few months.
Sources in the government had expressed concern over the rising prices, given its possible political fallout. Onion growers had also taken to the streets on multiple occasions in Nashik over low realisations.
With a 10 per cent subsidy, onion had seen a steady rise in exports. Figures from the Ministry of Commerce and Industries indicate a nearly 30 per cent rise in exports year-on-year. A total of 21.83 lakh tonnes (lt) of the bulb was exported during 2018-19 fiscal as compared to 16.75 lt exported in 2017-18. The subsidy had further pushed exports towards the end of the financial year.
The present price hike, traders say, is mainly due to a dip in onion acreage due to drought.
In the current rabi season, onion average is around 2.66 lakh hectares as compared to 3.15 lakh hectares sowed last year. Sown in December-January and harvested post March, the rabi crop is amenable for storage and feeds the markets till the arrival of the next crop in September-October.
Onion growers in Maharashtra also take kharif (sown in June-July and harvested post September) and late kharif (sown October-November and harvested post January) crops to ensure round-the-year supply.
In view of the price rise in onion, the central government has also started creating buffer stock of 50,000 tones of the bulb.
Trade sources say following a roll back in the subsidy, the wholesale prices are expected to drop. Jaydutt Holkar, chairman of Lasalgaon wholesale market, said the present price range had not resulted in a steep hike in retail prices. “By clamping down on exports, the present prices will not sustain,” he said.
Traders fear re-introduction of Minimum Export Price (MEP) as the next step for price control. MEP is the minimum price below which exports are not allowed.