There is an interesting correlation between onion prices and the fortunes of political parties holding office, both at the Centre and States. A key ingredient in many Indian dishes, the price of onions has in the past influenced the fate of many a political party. Back in 1980, it was Indira Gandhi, who swept back to power in 1980 by using the rising prices of onions under the previous Janata Dal government as a populist rallying agenda, even though the stench of her ill-informed decision to impose Emergency in her previous term had not subsided. Unsurprisingly, she accused the previous incumbent of failing to control onion prices, which she argued, burnt a hole in the common man’s pocket. The rest, as they say, is history. She rode back to power on a massive majority.
More recently, the correlation between onion prices and electoral results was played over yet again in both the 1998 and 2013 Delhi assembly elections. In 1998, the then-ruling Bharatiya Janata Party paid a heavy political price in Delhi due to onion price rise. At the time, onion price in Delhi went up to Rs 60 per kg when the BJP leader Sushma Swaraj was the chief minister of the national capital. Incidentally the day BJP government lost power in Delhi Assembly elections, the onion prices came down to Rs 10 per kg. In the 2013 assembly elections, it was the three-term Congress government led by Sheila Dikshit, which faced the voter’s wrath for failing to control onion prices. However, the usual disclaimer applies here: this correlation does not mean there is causation. The correlation, nonetheless, is hard to deny.
At present, the retail onion market in North India is reeling under unprecedented prices, reaching Rs. 80 per kg, while wholesale prices are hovering around Rs 5,000 per quintal. The prices may go up to Rs 100 per kg by next month. Rainfall in Maharashtra, the biggest onion grower, has so far been below average. Therefore, one cannot blame the BJP-led NDA government for its decision to import onions ahead of all important Bihar Assembly election later this year. Until these imports arrive on Indian soil, families are left with tighter household budgets with very little leg room for other essential purchases. After averaging almost 12% in 2013-14, food inflation fell off sharply to 6.6% in 2014-15 and has moderated even further thereafter. Will the current rise in onion prices drastically affect food inflation in the coming months? One can only wait and hope that the government’s order for more imports from neighbouring countries provides succour to the consumer.
Despite the fall in crude oil prices and other essential commodities, the Centre has been unable to mitigate the price rise. Moreover, India’s onion exports over the past year have seen hefty gains. According to various news reports, Indian exporters were allowed to sell over a million tonnes of onion through 2014-15 and the first quarter of this financial year. India’s onion exports had in fact gone up 25 percent in May and June, after a four-month slump. The onion trade has never witnessed a better time. Smart traders with hoarded onions are having a great time, despite the imposition of stock holding limits by various State governments. Without having the requisite political will and courage to tackle hoarders head on and impose measures in anticipation of a deficient monsoon, the Centre has committed a great disservice to the common man. The government of the day has been caught flatfooted, despite prior warnings of a deficient monsoon. Unfortunately, it is the common man that pays the price. It was interesting to note the Centre’s reaction on Monday after the stock market crash. Prime Minister Modi was of the opinion that “our economy is stable” but more needed to be done. In the humble opinion of many in the Indian public, he is right. Call it a reform agenda or not, one hopes that the state machinery takes a firmer stand against hoarders and brings about certain basic structural reforms to our agriculture market in the near future.