- Price of retail onions have doubled in India in the past few years
- India's prime minister, already under fire over a corruption scandal
(FT) -- Manmohan Singh, India's prime minister, already under fire over a multibillion-dollar telecoms corruption scandal, suddenly has a more down-to-earth problem on his plate -- the skyrocketing price of onions.
Their price at India's retail vegetable markets has doubled from Rs35 ($0.78) per kg to Rs80 in the past few days, angering consumers already feeling the pinch from a year of food price inflation and rising fuel prices.
Onions are a politically potent issue in India. Past governments have paid a high price over their failure to control the price of this dietary staple. In an attempt to cool prices, India on Wednesday slashed import duties for onions, after banning exports of the vegetable earlier this week. It has already started importing onions from its neighbour Pakistan, buying back produce that it has just sent across the border. But while wholesale prices have dropped, the market traders and pushcart vendors who dominate India's retail produce trade are still demanding a premium for the vegetable.
Mr Singh's office has written to the agricultural and consumer affairs ministries urging them to take all necessary steps to bring prices back down to an "affordable level".
Ashok Gulati, Asia director of the International Food Policy Research Institute, said the sudden spike stems from a drop in supply after unseasonable rains exacerbated by traders keen to cash in on shortages.
"[They] started digging a well when there is already a fire at home," said Mr Gulati. "[They] should have dug the well two months back. They should have been more alert."
The onion crisis comes at a difficult time for the Congress-led administration, which has been paralysed by a furore over the allocation of mobile phone spectrums, resulting in notional losses of an estimated $39bn in tax revenues.
In an editorial, The Economic Times warned that the onion crisis could be a harbinger of higher food prices overall, due to this year's late rains and its impact on many sensitive crops.
"Official complacency on the farm front is completely unwarranted," the newspaper said. "If vegetable prices go up, that could be an advance indicator of major good prices also not doing so well as could expected from a normal monsoon."
Even if the onion price spike is short-lived, it a bitter reminder of India's challenge in agriculture, where growth in output is trailing far behind rising demand for food, leading to a steady upward pressure on prices.
© The Financial Times Limited 2010
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