Govt considers stock limit option to cut onion prices but Maharashtra polls an obstacle

Minister Ram Vilas Paswan says govt reluctant to impose stock limit as it could severely hit income of farmers in Maharashtra by bringing down prices.

Onion prices have spiked across markets in recent weeks | Dhiraj Singh | Bloomberg

New Delhi: The Modi government is contemplating enforcing a stock limit to bring down the price of onions but is worried that the move may have an impact on the upcoming Maharashtra assembly elections.   

“We are thinking of imposing a stock limit on onion but we are watching the prices of onion for a couple of days and will enforce it if prices don’t come down,” Ram Vilas Paswan, Cabinet Minister of Consumer Affairs, Food and Public Distribution, said in a press conference in New Delhi Tuesday. 

“There is an upcoming state assembly election in Maharashtra owing to which the ministry is reluctant in imposing a stock limit as it might severely hit the income of farmers in the state by bringing down the prices,” Paswan added.   

Paswan further said that the state-run NAFED has already released 15,000 MT of onion from its stock of 50,00 MT. “States can approach NAFED  for further allocation of onion stock to them but only Delhi, Tripura, Haryana, Andhra Pradesh and Odisha have done so far,” the minister said.   

The government has also stopped the export of onions below the Minimum Export Price (MEP) to Bangladesh and Sri Lanka with immediate effect, Paswan added.

The central government by enforcing the Essential Commodities Act can impose a stock limit on onions to prevent hoarding. A stock limit was brought into force for onion in 2014, which was lifted in March 2018. 

The Department of Consumer Affairs (DoCA) had evaluated the price situation of onions on 21 August in a meeting chaired by secretary, DoCA, Avinash Srivastava. 

Officials from NAFED, National Cooperative Consumers Federation of India (NCCF) and Safal had attended the meeting held to check the rise of onion prices under the price stabilisation committee. In the meeting, it was decided that the maximum retail price of onion at Safal would be kept up to Rs 24 per kg. However, retail prices of onion in Delhi have increased to Rs 70-80 per kg over the past week.   

The wholesale prices of onion in Delhi, Kolkata, Chennai and Mumbai are 54 Rs/kg, 48 Rs/kg, 34 Rs/kg and 45 Rs/kg respectively. 

Onion prices spike across markets

Despite the decision to keep onion prices under check, crop rates have spiked across markets. 

Officials from Azadpur Mandi in Delhi told ThePrint on the condition of anonymity that onion prices in the market had increased to Rs 54/kg on 19 September from Rs 42/kg in the previous week.   

“Very few NAFED trucks are reaching Azadpur Mandi compared to the amount that was promised to us in the first week of September,” the official said. “Only four NAFED trucks have reached the mandi while 300 trucks arrived from other states.” 

Another NAFED official told ThePrint that the months of September, October and November are a lean period for onion supply and the condition had worsened with the excess rainfall in Maharashtra and Karnataka. 

“The surplus monsoon has not only disrupted the supply chain and onion crop in fields but has also dampened the existing stock of onion with NAFED,” the official said. 

The official estimated that almost 17,000 MT of onion stock may have been fully or partially damaged due to excessive rainfall this year.