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India bans onion exports after prices hit eye-watering levels

A leap in price of the pungent vegetable, and essential to Indian cooking, has pushed the government to ban exports indefinitely

Workers push a handcart loaded with gunny bags filled with onions at a wholesale vegetable market in New Delhi, India. AFP
Workers push a handcart loaded with gunny bags filled with onions at a wholesale vegetable market in New Delhi, India. AFP

It isn’t just the onion’s pungency that’s making Indians weep these days. It’s the price.

In the midst of a poor agricultural season and a slowing economy, India’s onion prices touched 75 Indian rupees (Dh4) a kilogram in parts of the country last week, more than three times what they were a few months ago. Prices have doubled over the past month alone.

The leap in prices for a vegetable that is essential to daily Indian cooking has so alarmed the government that it has temporarily banned onion exports altogether. Last year, India sold 2.2 billion kilograms of onions overseas, earning nearly US$500 million. The country is the world’s second-largest producer of the acrid vegetable after China.

This year, though, lashing monsoon rains have damaged the crops of many farms. The sudden downpours followed on the heels of weeks of drought-like conditions, which had already diminished the prospects of bumper harvests.

Prime Minister Narendra Modi is already facing severe heat for his perceived mismanagement of the economy. Consumer demand in every sector, from automobiles to men’s underwear, is slowing at an alarming rate. Between April and June, India’s economy grew by 5 per cent — the slowest quarter of growth since Mr Modi took power in 2014.

The sudden costliness of the humble onion became an immediate, tangible marker of distress that everyone could perceive. “It’s getting difficult to keep a household budget together when we use onions as frequently as we do in our cooking,” said Vijaya Ramachandran, a retired teacher in Delhi. Ms Ramachandran puts onions in her gravies, and makes a chutney out of them. In her colony, the local snack vendor serves up slices of raw onion alongside his puffed breads and chickpea curries. The onion, as she said, is ubiquitous in Indian food.

The dearness of onions will be particularly unpopular this month, as India moves through its big Hindu festivals of Pujo, Dusshera and Diwali.

The popular foodstuff is a common area for political pressure. India has prohibited onion exports in the past when prices have risen, most notably in 2010, 2014 and 2017. Mr Modi said that farmers were his "TOP" priority while campaigning earlier this year for a second term as prime minister, an acronym for tomatoes, onions and potatoes.

Apart from the export ban, which is in place for an indefinite duration, the government has released onions from its own stockpiles. It has also forbidden retailers and wholesalers from storing stocks of onions beyond a certain limit, in order to prevent hoarding. For retailers, the limit is 10,000 kilograms; for wholesalers, 50,000 kilograms. Officials have been deputed to raid vendors who are suspected of exceeding their stock limits.

In Delhi, chief minister Arvind Kejriwal set a price of roughly 24 rupees a kilogram for onions in government-run shops.

But these measures, which were announced on Sunday, have not gone down well with farmers, who were hoping to capitalise on the high prices.

On Monday, in the district of Nashik in the western state of Maharashtra, farmers held demonstrations against the government’s regulations, which were already having the effect to depressing onion prices. In a number of towns, farmers forcibly halted onion auctions, and they blocked the highway running from Agra to Mumbai, demanding that the government revoke the stock limits.

The crisis has also proven disastrous for India’s neighbouring countries, which depend upon Indian onions for their own supplies of the vegetable. In Nepal, a homemaker named Seema Pokharel told the news channel NDTV that onion prices have doubled in Katmandu over the past month. In Dhaka, a price of $1.42 per kilogram is the highest in Bangladesh in nearly six years.

Updated: October 2, 2019 04:35 PM

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