Written by Shaweta Sharma
Edited by Himanshi Shivani
Onion is the basic need of almost every house in India, also one of the most exported essential commodities.
India exports onions mostly to Bangladesh, Sri Lanka, and other nearby countries. In the April-July period, the export of onions rose an unusual 30%, causing prices to show signs of firming up. Onions tend to suffer frequent price and supply volatility. Retail prices this week rose to Rs 40 a kg from Rs 30 a kg in several cities.
Ban of Onion in India
Recently the central government banned onion export by issuing a notification.
This ban came just about three months after the government pulled the Essential Commodities Act, 1955 to make the imposition of stock limit and movement restrictions on food grains, edible oilseeds, potatoes, onions, and other essential commodities only applicable in extreme conditions like war or natural calamity.
That’s why this ban looks irrelevant however it is not the first time to ban global trade of this essential commodity.
The government had last banned onion exports on September 29, 2019, after a bad crop crimped output. In December 2019, prices soared to Rs 80 per kg in the national capital. The government had lifted the ban on March 15, 2020.
What Triggered this ban?
At this time when farmers are discharging their stored onions, the high Consumer Food Price Index which was 9.05 in August against 9.27 of July, and the rising price of onion are considered two main reasons for this ban.
1. Recently released Consumer Price Index (CPI) numbers by the Ministry of Statistics and Program Implementation (MoSPI) shows that the inflation was 6.69 percent a bit lesser than the 6.73 of last month but well above the Reserve Bank of India (RBI)’s target of 6 percent. This is considered a major cause.
2. Another cause for the ban is a steady increase in wholesale and retail prices of onions. At retail markets, onion is now trading between Rs 35-40 per kg as against the Rs 25-30 per kg in June.
3. Due to the heavy rains in the year many farmers lose their onion crops in vain and many didn’t have adequate storage facilities that led to the waste of their year-long hard work.
Is the Ban Worth it?
A sharp depreciation in prices is likely to see in view of the export ban. However, traders feel the prices are again going to rise nearly because the overall supplies will remain stressed.
The new crop will arrive only post November and with the demand expected to rise before the Dussehra festive season starts, prices will continue to remain high.
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