IN AN unusual move with less than a month to go for state elections in Maharashtra and Haryana, the central government Sunday decided to ban the export of onions in a bid to control the retail price hike across the country.
This is the fourth decision taken by the central government this year to control the price hike in onions. Assembly elections in the BJP-ruled states of Maharashtra and Haryana are scheduled to be held on October 21.
An order issued by the Directorate General of Foreign Trade (DGFT) under the Commerce Ministry said that the “export policy of onion… is amended from free to prohibited till further orders”. It said that “export of all varieties of onions… is prohibited with immediate effect”.
Union Minister for Food and Civil Supplies Ram Vilas Paswan also announced a stock limit for onions. Posting in Hindi on his official Twitter account, Paswan said that the government has prescribed a limit of 500 quintals for wholesale and 100 quintals for retail traders.
Push for sellers to shed stocks
The export ban is the latest in a series of measures aimed at increasing the availability of onions in retail markets. Policy makers are hoping that farmers will now accelerate stock liquidation, thereby bringing down the prices.
The Minister also asked state governments to take action against traders found to violate this limit.
The current price hike is mainly due to a shortage in crop amid the drought in Maharashtra and Karnataka. A central team that visited Maharashtra this month pointed to two months of supply still available and blamed speculators for the rise.
The central and state governments have kept a strict watch over prices since June amid reports of a possible dip in production from the main onion-growing states of Maharashtra and Karnataka.
Wholesale onion prices have been on the rise since May and post August, crossed a four-year high. Retail prices in a majority of cities have since crossed the Rs 60-kg mark, even reaching the Rs 80-mark in some of them.
Earlier this year, the government discontinued the 10 per cent export subsidy given to the crop. This month, the state-owned MMTC floated tenders to import 2,000 tonnes of onion. Efforts were also taken to curb exports by raising the Minimum Export Price (MEP) to a steep $850-tonne.
Traders say even at the present wholesale prices of Rs 36-kg — average recorded price at the Lasalgaon market in Nashik — Indian onions enjoy parity in the Middle East and Singapore markets. At present, the price of onion in Dubai and Singapore is equivalent to about Rs 55-60 per kg.
Onion prices have been a touchy issue politically, even playing a decisive role in the defeat of the then BJP government in Delhi in the 1998 elections.
This time, with the government offloading over 55,000 tonnes of buffer stock, the AAP government in Delhi, which goes to polls in a few months, has announced onion sales at Rs 23.90 per kg.