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Rediff News  All News  » Business » Govt may ban onion exports to check price rise

Govt may ban onion exports to check price rise

October 22, 2013 15:10 IST

The government is mulling banning onion exports to contain prices, which have risen back to the Rs 80-90/kg level in the national capital owing to supply crunch.

Photograph: Amit Dave/ReutersNot only in Delhi, consumers in other parts of the country are affected by rise in onion prices. In major cities, onion is being sold at Rs 60-80 per kg in retail markets.

The domestic availability of onion has been affected on account of damage to kharif crop because of unseasonal rains in key producing states including Maharashtra.

"Onion prices have gone up sharply. We are considering banning exports as there is not much scope to raise minimum export price (MEP)," a senior government official said.

Although exports have shown a decline after recent hike in the MEP, prices remain high as supply crunch has intensified with some damage to kharif crop due to unseasonal rains in key growing states, the official added.

The sharp rise in onion prices, after being stable at Rs 60/kg for some time, has forced the government to consider suspension of overseas sale of onions. A ministry level meeting has been scheduled today to discuss this issue.

Onion crisis is continuing from last three months. The government has taken several measures to check price rises but to no avail. It had slapped in August the MEP of $650 per tonne, which was later hiked to $900/tonne in September.

Due to curbs, onion exports fell by 28 per cent to 716,246 tonnes in the first six months of the current fiscal.

The government was expecting prices to fall sharply this month onwards on huge arrival of kharif crop but untimely rains have affected the crop and delayed the harvesting.

When contacted, Nashik-based government research body NHRDF Director R P Gupta said, "The kharif crop has got affected due to untimely rains in Maharashtra, Andhra Pradesh and Karnataka."

Currently, onion supplies are less than 50 per cent of the country's monthly estimated total demand of 9-10 lakh tonnes. The stored onions have also got exhausted now, adding to the price volatility. India produced 16.3 million tonnes of onion last year.

Centre asks states to take firm action against onion hoarders

The Centre said the price spike in onions is due to artificial scarcity and asked the state governments to take firm action against hoarders.

"We have enough onion stock in the country. The state governments must act firmly against hoarders who are hoarding onions which has led to the artificial scarcity and sharp escalation of prices," Commerce Minister Anand Sharma told reporters in New Delhi.

Inflation is a matter of "serious concern," Sharma said, adding that it has risen driven up by vegetables like onion and food items. "We hope it is temporary, seasonal and will settle down".

Asked if the government is considering revising the minimum export price (MEP) of onion, Sharma said: "This time due to the situation, we have fixed MEP on onion... When the situation will improve, we will revisit our decision."

India consumes 88 per cent of the total onion production and exports 10 per cent of it, he added. Currently, MEP stands at $900 per tonne.

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