As prices rise, the Union government begins selling onions at a lower price

According to a senior official with knowledge of the situation, the Union government has begun offering onions for sale to customers at a subsidized price of ₹25 per kg in more than a dozen locations in an effort to lower the cost of the food and increase supply.

For the second time in the last six months, lower supplies brought on by later summer crop harvests have pushed up prices of the widely eaten vegetable, forcing the government to set a minimum export price (MEP) of $800 per tonne. MEP is the price at which exporters are unable to sell to purchasers worldwide. It is an action to restrict exports abroad.

In several areas, retail costs have skyrocketed to ₹70-80 per kilogram, more than doubling from ₹30 only a few weeks before. Because onions are used so often in Indian cuisine, urban consumers are more likely to be affected by price increases than those of other supermarket goods.

Two state-backed food organizations began operations on Wednesday to sell subsidized onions in food vans across several cities, including Delhi, Jaipur, Bikaner, Kota, Chandigarh, Jalandhar, Bhopal, Raipur, and Hyderabad. The onions were taken from the consumer ministry’s 500,000 tonne of reserves.

Official data indicates that certain consumption centers have seen a little reduction in pricing as a result of government action. “The government’s sale of cheap onions and the imposition of minimum export prices have caused prices to come down and will continue to do so,” the official said.

The Modi administration places a high premium on managing food inflation. In addition to the federal elections in 2024, the governing Bharatiya Janata Party (BJP) will contest in five states later this month.

The price of the vegetable on Wednesday was ₹50.92 per kg in the west zone and ₹56.89 per kg in the north zone, based on data from the price monitoring cell of the consumer affairs ministry. The average retail price per kilogram in the northeast was ₹60.

Due to severe weather and insufficient rainfall, onions, which are very volatile, have witnessed numerous price fluctuations this year. These factors have harmed harvests in Maharashtra and Karnataka, two major production states, forcing farmers to replace the summer crop.

In contrast to tomatoes and other greens, whose skyrocketing costs have put a strain on family finances, the government has about 500,000 tonnes of onions in reserve, of which 170,000 kg were sold at a discounted price during the last price spike in August. Therefore, when supplies seem to be at their lowest point, the government might release inventories of onions in order to interfere in the market and lower prices.

India generates over 30 million tons of bulbs a year, but only 16 million tons are needed for consumption.

Despite the state-backed food organizations NCCF and NAFED carrying out “calibrated disposal of the procured stocks in major consumption centers,” prices are still spiraling out of control.