Millennium Post

Layers of onion

The Union government has been at work trying to rein in the increasing onion prices ahead of crucial assembly elections in Maharashtra and Haryana. Excess monsoon and supply disruptions due to floods in major onion producing states like Maharashtra and Karnataka are said to have hardened both the wholesale and retail prices of onion, causing a rise in its price since May. With the impending assembly elections, rising onion prices indicate a tipping of the scales affecting the delicate electoral arithmetic, as history bears witness to it. Regarding matters of price, there the things that the government can do: hold discussions with the commerce ministry to review the whole regime of export and import if something sustainable is to be done. A step in this direction has been the Union government notifying the price of $850 per tonnes for export of all varieties of onions to discourage its export and cater to the domestic market. Another option being that the government invokes essential commodities act, 1955 and impose a stock limit on traders under which the Union government is empowered to notify a stock limit for a commodity for a specific period; this discourages the hoarders as they cannot stock beyond the limit. But short-term economic measures apart, there is a history of electoral politics in India in connection with hike in onion prices. Pertinent in the historical context is the general election of 1980, commonly called the "onion election", as Indira Gandhi put it. The rising onion prices contributed to the fall of the first non-Congress government after Independence. But within a year, onions took to reign of politics when the prices shot up to Rs 6—unthinkable at that time (now the prices touching Rs 80 a kg!) This marked the beginning of a trend which would be routine phenomena in India's electoral politics. Fast forward to 2013, the prices shot up to Rs 100 a kg in some parts of north India, forcing the country to float a tender to import onions from Pakistan, Egypt, and China. Rise in price of onions and other essential commodities pushed inflation, compounding matters for UPA II before Assembly elections in crucial states like Delhi and Rajasthan. Consequently, Congress was comprehensively routed in both states. Bare facts are that onions are less than 1 per cent by value of India's agricultural production and the average Indian consumes less than 800 grams of this seasonal crop in a month, the supply of which traditionally dips during July to September—time when only stored winter crop harvested around March is available for consumption. The most obvious thing is not economics but the politics surrounding the onion phenomena. The political footprint of this was established in the 1980 elections in the backdrop of Indira Gandhi after her post-emergency election debacle. The prices of onions despite its relatively inelastic demand is more of an indicator of the electoral wave than of economics.

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