Duty axed, onion prices ease

On the day the main political Opposition held a rally in New Delhi against corruption, the government moved swiftly to control prices, the other factor that has put enormous pressure on the ruling United Progressive Alliance.

The most significant salvo was against the rising price of onions — a staple of Indian kitchens — which has been known to bring down governments in the past. A ban on its export until mid-January, announced on Monday, was notified on Wednesday and extended indefinitely. Duty on its import has been reduced to zero.

Onion imports so far attracted customs duty of 5 per cent, while countervailing duty, which is meant to protect domestic producers, was 4 per cent. The government has also asked state trading firms — STC, MMTC and PEC — to augment supply by importing onions quickly.

“In supersession of all earlier notifications on export of onions, it has been decided to prohibit export of all varieties with immediate effect and until further orders,” Anup K Pujari, director-general of foreign trade, said in an official communiqué issued on Wednesday.

Onion prices had shot up due to an anticipated shortage caused by unusually heavy rains in growing areas. Maharashtra has suffered 40 per cent crop damage, while Gujarat, Rajasthan and Madhya Pradesh have lost 15-20 per cent.

Consequently, prices rose from Rs 10-11 a kg in June to Rs 70-85 a kg in retail markets across the country. Wholesale prices had doubled to cross Rs 70 a kilo at the country’s biggest producing centre, Nasik.

However, after the ban was announced, prices have fallen about 40 per cent. Retail prices are said to be down to Rs 50 a kilo.

The situation is being monitored by the Cabinet secretariat, which will meet tomorrow to decide on the quantity of temporary imports by the government through its agencies.

Agriculture & Food Minister Sharad Pawar said on Tuesday that the government was not considering importing onions.

In the current year, the government had allowed 11.70 lakh tonnes in export orders, against 18.73 lakh tonne in 2009-10. Production in 2009-10 stood at 121 lakh tonnes.

“The government’s effort is to augment supply and check hoarding. We have reports that people are hoarding (onions) to make a killing,” Commerce Secretary Rahul Khullar told reporters in New Delhi after meeting the chiefs of state trading corporations.