Prices have gone up for a number of other necessities, such as fruits and vegetables, but the most expensive item is onions. In most regions of the nation, the costs have more than doubled and in many places have reached Rs 100 per kg.
In the five states holding elections this month, the increase in onion prices has been brought up as an election issue. Onion costs have caused parties to lose elections in the past. One of the most important vegetables is onions, and their price fluctuates a lot. Therefore, governments handle changes in the price of onions with extreme care and discretion.Source: News Click
To preserve domestic availability, the central government modified the export policy and set a minimum export price for onions until December 31. As five states prepare to go to polls on Tuesday, it has started a market intervention to supply onions at Rs 25 a kg, raising concerns about potential violations of the model code of conduct. It has raised the buffer stocks and established a price stabilisation fund. However, the rate of growth in domestic consumption has outpaced the market’s release of buffer stockpiles.
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Ironically, even though the nation is producing twice as much as is needed domestically, prices have increased. From 316 lakh metric tons (MT) in 2021u20132022 to 318 lakh MT in 2022u20132023 was the rise in production. The top producing states are Madhya Pradesh and Maharashtra, followed by Gujarat and Karnataka. Certain standing crops have been harmed by unseasonal rains and hailstorms. This, combined with the delayed sowing, has raised concerns about a decline in production and supply interruptions.
The price volatility indicates that the mechanism for price stabilisation is insufficient. The government has declared that market manipulation of prices, rather than simple supply and demand, is the real issue. Reportedly, certain merchants are engaging in speculative activity by disseminating reports of shortages.
This may be partially accurate, but speculating cannot cause prices to surge across the nation for just a select few merchants. According to the government, it has entered the wholesale and retail marketplaces and is already selling onions for Rs 25 per kg at over a thousand locations in 100 cities nationwide. Whether the government will have sufficient buffer stocks to successfully interfere in the market and regulate pricing is the question. The danger of further escalating food inflation has also increased due to elevated onion costs.
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