Political Vegetables: Onion Price Rise Tears

Posted in Finance Articles, Total Reads: 4089 , Published on 24 December 2010
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In India over the past few months there have been instances of  an abnormal increase in the price of certain vegetables such as onions, tomatoes, lentils, garlic etc. Since these vegetables form a part of daily diet of millions of people, it has become an issue of national importance.  Owing to these reasons these vegetables can be termed as “political vegetables”  as over the years it has been witnessed that a few governments had to make way due to its inept handling of these crisis.

 

Onion Price Hikes

So are onions really such a big issue for a country like India.  The answer is indeed yes because Indians simply cannot do without onion; almost all the dishes have onion as an ingredient. Since it is present in every meal that an Indian has, its price rise has been exploited to the hilt by our politicians. Over the years there have been several instances wherein a government had to step down just because they had not been able to keep the price in check.

So what are the reasons for the sudden increase in the price of onions. There is no clear cut answer for this question and it could be attributed to unseasonal rains in the onion growing belt of the country. This caused a delay in the arrival of onions from these states and hence the resulting demand – supply gap which led to the market adjusting the price equilibrium. Another theory put forward for the price increase is that of exports being allowed to other countries even though there was an impending threat of shortage of onions for domestic consumption. Yet another theory put forward is that because of hoarding of onions by the middlemen has caused an artificial shortage resulting in the spiralling prices. The price rise is a classic case of management failure on the part of the government of an agricultural produce which is so important to Indians.

But what are the steps taken by the government to bring down the prices of the onions. As a short term measure, the government has completely banned the export of onions. To bring down the prices and make exports unattractive, the minimum export price was increased from $525/tonne to $1200/tonne. Further with fresh stocks of onions expected to arrive in the market starting January, the prices are going to fall down further. And not only that the import duty on onions has been reduced to zero. With all these measures the prices of onions are expected to drop in the coming weeks.

The onions potency as political symbol can be gauged from the fact that it has made national headlines for the past one week. Also the government’s response has been so quick as if there was some national emergency. The opposition has been quick to use this opportunity and has slammed the government by making sarcastic comments on them not being able to stem the price rise. So could this be another case of this political vegetable bringing down yet another government. Only time can tell.

So if the government is unable to wipe away the tears of millions of Indians quickly, then the next would be their own as such has been the power of these political vegetables.

 


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