Why rising onion prices is fantastic news for Modi

The humble onion led to BJP's defeat in 1998. Will it lead to a victory in 2014?

If the BJP comes to power in 2014 and Narendra Modi becomes Prime Minister – it will be on account of multiple factors – his pro-development stance,  an anti-incumbency factor for the UPA, communal polarization, crippling growth, twin deficits, high inflation, a multitude of scams under UPA II and last but definitely not the least – the humble onion, which while making the country cry could be putting a big smile on Modi’s face! 

Onion prices rose by an eye-watering 245% year on year according to the latest inflation data released yesterday and have been consistently high since January. In fact this government’s tenure has been marked by several sporadic phases of elevated onion prices, with the 2010 crisis being described as ‘grave’ by the PM. 

 

This is fantastic news for Modi!
 

The Congress won national elections in 1980 after it made costly onion prices into a campaign issue along with other factors and ironically the onion also led to Modi’s party – the BJP’s defeat in the national capital in 1998 when prices rose a month before polls. The current environment looks eerily similar to 1980 where as a government reference note observes a “hike in oil prices and poor agricultural production led to reappearance of high inflation in 1979-80 (17.1%) and 1980-81 (18.2%)”. The UPA should be scared!

“The price of onions could become a political game changer” Satish Misra, an analyst at the Observer Research Foundation told Bloomberg last month. So politically potent is the commodity that experts believe it can swing elections. Food inflation has as it is been the top concern of voters on every opinion poll and costly onions symbolize price rise that affects the poorest of poor. The BJP knows how critical it is to cash in on this crisis. Its activists were seen selling onions outside the party office in Delhi late last month for a third of the market prices and gifting bagfuls to women on Raksha Bandhan. 

Evidently the onion could become kingmaker if history is any precedent. But what voters would really want to know is – how Modi the poster boy of urban development and good economics, the man who gets lords of corporate India to make a beeline at ‘vibrant’ summits and attracts billions of dollars of industrial investment to his state, the man accused by the Congress of being a middle class messiah who ignores the rural poor, would ensure the aam aadmi sheds less onion tears? 
 

India’s onion conundrum is a consequence of exactly the kind of structural reforms the UPA government is accused of disregarding as it adamantly strode ahead with legislative changes of dubious efficacy on things like FDI in  multi-brand retail. The BJP was a stiff opposer of this liberalization  - Why isn't Modi tactically targeting the government on this issue then? 

Officials say levitating prices are a result of an unholy cocktail of ingredients – right from water shortages to excessive rains (basically overdependence on monsoons), speculation to hoarding, inadequate supply chain infrastructure to outdated farming practices and an archaic set of laws that govern our APMC mandis giving middle men excessive power in deciding prices and restricting farmers access to trade.

The Congress government which has ruled India for the better part of our post-independence history has miserably failed in fixing any of these problems. Barely 35% of our land is irrigated (according to a 2009 World Bank Study) which means we are at perennially the mercy of rain gods! Maharashtra spent Rs 70,000 Cr in the last 10 years but added only 0.1% area under irrigation with serious allegations made against the Sharad Pawar led NCP which is in coalition with the Congress at the state and the centre. As for AMPC amendments, only 17 out of 35 states have undertaken any meaningful reforms, which include 3 of the 6 BJP ruled states including Gujarat. 
 

Despite these failings the Congress, embellished with ‘achievements’ like the Food Security Bill continues to confidently project its aam-aadmi agenda as a centerpiece of its election campaign, and as a counterattack to Modi's supposedly elitist focus on things like infrastructure development. 
 

Perhaps in his next rally, rather than make attempts at polarizing army votes, Modi could tell the nation the real story of the onion & also how he proposes to rewrite it. That would not only call the Congress’s bluff, but also give voters an insight on whether they voting for hype or real change.