New Delhi: There is no sign of skyrocketing price of onion coming down anytime soon. The retail price per 1 Kilogram has already touched Rs 70 in many parts of India and is continuing to go further up.
The failed Monsoon in major onion growing states like Maharashtra and Karnataka is also one of the main reasons for the price rise.
The following are the reasons for the onion price rise:
1. Onion prices follow a cyclic pattern, and show a tendency to rise from July to September. This is the lean period before the new harvest comes in.
2. A shortfall in production of approximately 5 lakh Metric Tonnes coupled with deficient rains last year and this year has made the ground fertile for speculation and hoarding in wholesale mandis, particularly in Maharashtra which supplies 27% of onions to the country.
3. High prices in addition to fear of even higher prices is leading consumers also to buy more than needed and hoard.
4. Tender to import 10,000 MT of onions will open on August 27. By the time the imported bulb comes into the market, the new Harvest will also come in. Tender to import onions has come in too late in the day.
5. Concerns are also there about whether adequate quantities are available for imports.
6. Price stabilisation fund with a budget of Rs 500 crore is too little to make effective market intervention as is clearly seen this year.
7. For effective intervention, the government has to buy at least 20% of the produce at the back of envelop calculation of Rs 8000 crore.
8. Inadequate availability of cold storage.
9. Role of state government who can impose stock limits on onion, crack down on hoarding and speculation is also equally important.
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