Extended Diwali holiday may push up onion prices again

Poor response to import tender could further squeeze supplies

Though onion prices in a few retail markets are showing signs of stabilising, the relief could be short-lived, as traders in major wholesale markets in Maharashtra are planning to go on an extended Diwali holiday till November 11. This could result in disruption in supplies across the country after Diwali.

A worried Union government has immediately swung into action. It has urged Maharashtra to direct onion traders to return to work around November 5.

Disruption in supplies, a few experts believe, could have an impact on the United Progressive Alliance's prospects in four coming state Assembly elections, primarily in Delhi. Officials from the Department of Consumer Affairs have held talks with their counterparts from the Ministry of Agriculture to ensure the extended holiday doesn't disrupt supplies across major retail markets.

A few trade associations, too, have objected to the extended closure of wholesale markets in Maharashtra. About 70 per cent of India's demand for onions is met through supplies from Maharashtra. Fears of a second spike in retail onion prices after Diwali have been exacerbated by the poor response to an attempt to import the commodity to boost supplies in the Delhi market. The open tender floated by the National Agricultural Cooperative Marketing Federation (Nafed) to import an undisclosed amount of onions, primarily from Pakistan, Egypt, China and Iran, failed, as five of the six bids received were invalid, while the sole eligible supplier quoted a high price. The valid bid quoted Rs 50 a kg at ex-Delhi price for Chinese onion; the price was considered unfavorable.

“Nafed is closely monitoring the arrivals and a fresh review would be done for subsequent steps to be taken, if required,” said a Nafed statement. The tender was opened on October 29. Officials said onions from China weren’t considered favourable as these didn’t cater to local taste.

Meanwhile, according to data provided by the Department of Consumer Affairs, onion prices in a few retail markets are showing signs of moderation. In Delhi, prices have dropped Rs 10 a kg in select retail markets; in smaller towns such as Gwalior, too, these have dropped by a similar amount. “The situation is slowly coming under control, but it could go out of hand if remedial measures are not taken immediately taken,” said a senior official.