 "After tomatoes, now onions at subsidised rate: How Centre is fighting food inflation")
The Centre is ramping up its fight against food inflation. After ordering its agencies to sell tomatoes at subsidised rates from 15 August, the Centre announced it would do the same for onions from today. The price of onions has spiked around 20 per cent over the past couple of weeks. Let’s take a closer look at how the Indian government is fighting food inflation to give relief to the common man: Onions at Rs 25 kg, raising buffer stock According to News18, the Centre has ordered the National Cooperative Consumers’ Federation of India (NCCF) to begin selling onions at Rs 25 per kilo from today.
The vegetable will be sold through the NCCF’s retail outlets and mobile vans.
The Centre has also decided to increase its buffer stock of onions from 300,000 metric tonnes to 500,000 metric tonnes. Buffer stock is maintained to meet any exigencies and for price stabilisation, if rates go up significantly during the lean supply season. It also ordered the NCCF and the National Agricultural Cooperative Marketing Federation of India Ltd (NAFED) to buy 1 lakh metric tonnes of onions “to achieve the additional procurement target alongside calibrated disposal of the procured stocks in major consumption areas”. “The retail sale of onions will be suitably enhanced in the coming days by involving other agencies and e-commerce platforms,” the government said, as per News18. In 2022-23, the government maintained 2.51 lakh tonne onion as buffer stock. “It was decided to release the onion stocks by targeting key markets in states or regions where retail prices are ruling above the all-India average and also where the rates of increase in prices over the previous month and year are above the threshold level. Disposal through e-auction and retail sales on e-commerce platforms are also being explored,” a food ministry release said Friday. Rabi onion harvested during April - June accounts for 65 per cent of India’s onion production and meets the consumer’s demand till the Kharif crop is harvested in October-November. The procured stocks are usually released through targeted open market sales and also to states and Union territories and government agencies for supplies through retail outlets during the lean supply season. Duty on exports of onions The government on Saturday imposed a 40 per cent duty on the export of onions.
This came in the backdrop of onions touching Rs 37 per kilo on Saturday.
“The notification shall come into force with immediate effect and will remain in force up to and inclusive of December 31, 2023,” the government stated. Union consumer affairs secretary Rohit Kumar Singh was quoted as saying by The Times of India that the Centre made the move to increase domestic availability amid signs of increasing prices. “It was also being noticed that there was a sharp rise in exports in the recent past,” Singh added. Officials told the newspaper the January to March period witnessed around 8.2 lakh tonnes of exports as against 3.8 lakh tonnes in the same period last year. While this is the first such export duty to be imposed on the kitchen staple, the Centre previously barred exports of onions from September to December 2020 and had in 2019 fixed a minimum export price, according to The Times of India. Tomato at subsidised rates, imports from Nepal According to NDTV, the NCCF and NAFED began selling tomatoes at a subsidised rate of Rs 40 per kilogram in some cities. According to DNA, the NCCF and NAFED have been selling the fruit at a subsidised rate for the past month. [caption id=“attachment_13005732” align=“alignnone” width=“640”] India has ordered ten tonnes of tomatoes from Nepal.[/caption] The price was initially fixed at Rs 90 per kilo, which was then brought down even further. “The last downward revision of the retail price to Rs 50/-per kg was on 15 August, which now stands further reduced to Rs 40 per kg w.E.F. August 20,” an official statement said on Friday. The NCCF last week said it was importing five tonnes of tomatoes from Nepal – and that these would be sold in UP at a subsidised rate of Rs 50 per kilo. The National Cooperative Consumers’ Federation of India Ltd (NCCF) has contracted for import of 10 tonne of tomatoes from Nepal.
The retail intervention is being undertaken on direction from the Union consumer affairs ministry.
Speaking to PTI, NCCF Managing Director Anice Joseph Chandra said, “We have contracted 10 tonnes of tomato imports from Nepal. Out of this, 3-4 tonnes was distributed yesterday in Uttar Pradesh. About 5 tonne…is in transit and will be retailed tomorrow in UP at subsidised rates.” The imported tomatoes cannot be sold in other parts of India because of the short shelf life, she said. Asked about further import of tomatoes from Nepal, Joseph Chandra said, “The imports will be undertaken from Nepal in a calibrated manner as domestic arrivals have started hitting to mandis in some states.” Arrival of the new tomato crop in Madhya Pradesh and Andhra Pradesh has started in wholesale mandis and prices are also cooling down, she said. What do experts say? That the weather is to blame. Former agriculture secretary Siraj Hussain told News18, “The current problems are due to the impact of adverse weather since the beginning of the year. Due to these problems, the production of several agricultural commodities have been adversely affected and it’s causing food inflation.” “The government is right to be concerned about the impact of food inflation on core inflation. Therefore, the measures taken to increase domestic supply of various items can be justified. But we should remember that India’s agricultural surpluses are marginal and similar problems are likely to arise in future as well,” he added. These moves come as July saw retail inflation spike to a 15-month high of 7.44 per cent as tomatoes, vegetables and other food items turned dearer. Official data showed that the Consumer Price Index (CPI) based inflation surged to 7.44 per cent in July, much higher than 4.87 per cent in June.
Retail inflation stood at 6.71 per cent in July 2022 and the previous high was recorded at 7.79 per cent in April 2022.
The CPI-based inflation in the food basket was at 11.51 per cent in July, significantly up from 4.55 per cent in the preceding month, and 6.69 per cent in July 2022, according to the data released by the National Statistical Office (NSO). In July, the annual inflation in the vegetables basket was at 37.44 per cent, spices at 21.63 per cent, pulses and products at 13.27 per cent, and cereals and products at 13 per cent. The food and beverages segment together contribute about 54 per cent of the overall CPI. Traders protest export duty But not everyone is happy with the government’s decision to levy duty on export of onions. `Traders here on Monday said they have decided to close onion auctions indefinitely in all the Agriculture Produce Market Committees (APMCs) in Maharashtra’s Nashik district to protest against the Centre’s decision to impose a 40 per cent duty on the export of the kitchen staple. In view of the decision, the onion auctions remained closed at most of the APMCs in the district on Monday, including at Lasalgaon, the largest wholesale onion market in India, sources said. Traders claimed the central government’s decision to impose 40 per cent duty on the export of onions till December 31, 2023 will adversely affect the onion growers and its export. The decision for the indefinite closure of onion auctions here was taken on Sunday in a meeting of the Nashik District Onion Traders Association, its president Khandu Deore said on Monday. “In case onions are brought to an APMC, as the decision will take time to reach farmers, then the auction of those onions will be conducted and thereafter the process will remain closed indefinitely. This was also decided in the meeting, as per the request by various organisations of farmers,” he said. At some places, onions were brought and their auction began at the APMCs, as per sources. Sanjay Pingle, onion-potato market president at the Vashi APMC in neighbouring Navi Mumbai, urged the Centre to rethink over its decision of imposing 40 per cent duty on the export of onions.
Talking to PTI, Pingle claimed the government’s decision will adversely affect the onion growers in the state.
Impact Shorts
View All“We are also under a lot of pressure from farmers asking us to shut down the market and stop the sale of onions. At least 10-15 associations have asked us not to sell the onions. The entire Nashik district is observing a closure (of onion auction) today. In the coming days, local markets will also close. The APMC has also decided to support the farmers,” he said. “If we pay 40 per cent duty to the government, then the rate of the onion which we were exporting for Rs 25 (per kg) will drop down to Rs 15. At this rate, we will be forced to purchase onion at Rs 10, which will not even cover a farmer’s production cost,” Pingle said. He claimed some agency has given a “wrong report” to the central government (over the issue), and not taken into consideration the rise in expenditure on fertilisers, labour cost, etc on the production of onions. “Even today, there is a balance of 80 per cent onion stock in Maharashtra and 70 per cent in Madhya Pradesh,” he further claimed, adding that due to less rainfall, there has been a good production of onions in Maharashtra and Karnataka. If 10 years back the price of onion was Rs 10 (per kg) and now after considering the production cost it it Rs 17-18, there is not much increase. It is about Rs 25-30 in the wholesale market and Rs 35-40 in retail, he said. Pingle urged the government to provide onion through the public distribution system (PDS), as is being done for rice and wheat. “If you want that the poor people get onion at a cheaper rate, then sell it through PDS at Rs 2 to Rs 10 (per kg),” he said. He also claimed that due to the Centre’s decision, the export of onion will drop drastically and facilitate more income for farmers in Pakistan, Iran and Egypt. Pingle also urged that Union minister Nitin Gadkari take up this issue with the Centre. He said in the coming days, they will take a decision on this issue as “we want to be with the farmers”. The Centre should call a meeting of the stakeholders and then only implement this decision, he said. With inputs from agencies
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