Here is why Onion prices are shooting up

Onion prices which have been rising for weeks now are being sold at ₹80-₹100 a kg in many states across India.

Despite various measures having been put in place by the state and Central governments prices have been on fire and imports are now being made to cool down the retail level spike.

Hike in onion price is also bad in cities like Bengaluru and Chennai, where onions are being sold for ₹60 per kg. A similar price trend has prevailed in other parts of the country as well.

The Centre has warned that strict action will be taken against traders in Delhi, Maharashtra, Rajasthan and other states who are trying to manipulate the prices.

The Committee of Secretaries (CoS) has asked MMTC, India's foreign trade enterprise, to import 1 lakh tonnes of onions.

The Consumer Affairs Ministry has written to MMTC on Saturday informing it of the CoS decision. MMTC has been asked to ensure that the imported onions are available for distribution during the time period from November 15-December 15.

In the light of public concern over high prices of onions in the market, the Ministry of Agriculture on Tuesday decided to allow relaxation from the condition of fumigation and endorsement on PSC as per the Plant Quarantine Order, 2003 for onion imports up to November 30.

Here is why Onion prices are rising

The excessive rain in key onion producing states across country such as Karnataka, Maharashtra, Madhya Pradesh, Gujarat, Rajasthan, Uttar Pradesh, and Bihar, is one of the main reasons that have led to a shortfall in its supply.

Another reason for price hike is believed to be the delay in the arrival of monsoon, which in turn delayed sowing. This resulted in a cascading effect on arrival in the mandis.

Illegal hoarding of onion ahead of the festive season is also one of the major reasons. Many traders in Delhi resorted to large-scale, pre-festival hoarding, a fact that the Delhi government acknowledged at a review meeting chaired by its Food and Civil Supplies Minister Imran Hussain.

Onion Production has gone down by 50% in the year 2019. If the government data on onion production from the past 5 years are analysed, it can be seen that the onion production in 2019 nearly halved in comparison to 2018. In the past five years, the total onion production in all of India in September, on average, was 6 to 6.5 lakh metric tonnes which were sold at an average price of ₹10-20 per kg for the customer.

Central govt is taking measures to control the prices of onion. It has a buffer stock of 56,000 tonnes of onion, of which 16,000 tonnes have been offloaded so far. Central agencies like Nafed and the National Cooperative Consumers' Federation of India have been selling onion from the buffer stock at ₹ 22-23/kg, while Mother Dairy's Safal stores are selling at ₹ 23.90 per kg in the National Capital.

The state governments have also been asked to boost the supply by lifting central buffer stock. Some states like Delhi, Tripura and Andhra Pradesh have shown interest so far. In Delhi, around 200 tonnes of onion is being offloaded every day.

IT Dept surveys onion traders in Maharashtra, Delhi, others

The Income Tax Department on Monday surveyed Onion traders in Maharashtra, Delhi and Madhya Pradesh following reports of alleged hoarding of the commodity amid its skyrocketing prices, officials said.

They said I-T sleuths checked account books of some wholesale dealers against physical stocks of the commodity and its delivery to buyers as part of a tax evasion probe.

The department is examining the onion stocks as its prices have shot up to about Rs 100 a kg in various markets and there are reports of hoarding, they said.

Only business premises of stockists in Maharashtra, Delhi and Madhya Pradesh were surveyed, they said.

Some digital evidence and incriminating documents have been found and are being analysed, they added.