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Govt urges Pakistan to resume onion exports

Govt urges Pakistan to resume onion exports

New Delhi: Congress government is trying to persuade Pakistan to resume full exports of onions, the foreign minister said on Friday, as food inflation weighs on Asia’s third-largest economy and fuels anger against the ruling coalition.

Discontent over food inflation has been a major headache for Prime Minister Manmohan Singh who is struggling with a slew of corruption charges against his government, eroding its political capital from an impressive election victory in 2009.

Pakistan banned overland exports of onions to India on 4 January with traders saying they feared shortages at home. Exports by sea is still allowed, but much of the trade used to be by road and rail -- cheaper modes that reached the vegetable to Indian markets quickly. “We have initiated talks and before not too long we are hopeful we will find a solution to this, easing pressure within our country for onions." Indian Foreign Minister S.M. Krishna said in New Delhi.

Onion prices, a key food staple for Indian families used for almost all Indian dishes, rose over 23% over the week to 25 December.

Soaring onion prices have helped dislodge state governments in the past, and rising food costs often spark street protests. India wanted Pakistani onions to offset costs and help relieve political worries.

India’s food inflation rose for the fifth straight week to the highest in more than a year this week, reinforcing fears it has spilt over to broader prices and cementing expectations of a January interest rate hike.

Unseasonal rains are officially blamed for pushing up prices of vegetables such as onions and tomatoes, but some commentators point instead to poor agricultural productivity and transport after years of few reforms and weak government investment.

The United Nations’ food agency (FAO) said on Wednesday that global food prices hit a record high last month, above 2008 levels when riots broke out in countries as far afield as Egypt, Cameroon and Haiti.

In a sign of possible voter anger over high prices and corruption, a poll published on Friday showed India’s ruling Congress party would lose its majority if an election were held tomorrow.

Congress would drop around 40 of its current 206 seats, the AC Neilsen poll showed, as 44 percent of respondents said Singh’s previously unimpeachable image had been affected by the scandals.

The Mood of the Nation poll, conducted by AC Neilsen and India Today magazine, surveyed 12,349 voters across 19 states in face-to-face interviews between Dec 4-19.

The government has ordered raids on onion traders to stop hoarding.

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