Govt starts selling onions at ₹35/kg to contain rising prices, improve local supplies

New Delhi: The government started selling onions at ₹35/kg on Thursday to contain rising prices, replicating the step taken to cool rising tomato prices earlier this year.

“The subsidised onions will be sold in Delhi NCR and Mumbai in the first phase,” Union minister of consumer affairs and food distribution Pralhad Joshi said while launching the initiative. “In the second phase, they will be sold in the capital cities of different states and in the third phase, which will be rolled out in the third week of September, onions at discounted rates will be sold across the country."

The subsidised onions will be sold through various platforms including stores and vans operated by the National Agricultural Cooperative Marketing Federation of India (NAFED) and the National Cooperative Consumers’ Federation of India Ltd (NCCF).

The second phase will begin next week and cover key state capital cities including Kolkata, Guwahati, Hyderabad, Chennai, Bengaluru, Ahmedabad and Raipur.

"There is no cap on the quantity and there is no need to show any identity card to get the subsidised onions," the minister added.

In the National Capital Region, the onions will be sold through mobile vans at 38 locations including Krishi Bhawan, National Cooperative Union of India complex, Rajiv Chowk Metro Station, Patel Chowk Metro Station, and parts of Noida, said Nidhi Khare, consumer affairs secretary. In Mumbai, they will be sold at Parel and Lower Malad.

Buffer stock

The government has a buffer stock of 470,000 tonnes of onions procured by the NCCF and NAFED directly from farmers in Maharashtra and Madhya Pradesh. They purchased the onions at an average price of ₹28/kg.

The market intervention is aimed at improving local supplies and curbing rising prices of the kitchen staple, which is being sold at over ₹70/kg in the national capital and ₹80/kg in some parts of the country.

India's retail inflation rate, based on the Consumer Price Index, eased to 3.54% in July, the lowest level in 59 months, according to data from the ministry of statistics and programme implementation.

Onion production dropped significantly to 24.2 million metric tonnes in the 2023-24 crop year from 30.2 million tonnes in 2022-23 and 31.7 million tonnes in 2021-22, according to data from the ministry of consumer affairs.

"There will be no loss to farmers. The mandi rate this year ranges from ₹12.30/kg to ₹27.30/kg, which is much higher than last year’s mandi price of ₹6.93/kg to ₹12/kg," Khare said. “This move is intended to protect consumers from exorbitant prices and prevent windfall gains for intermediaries. We are hopeful that prices will come down in the next 4-5 days, just as it happened in the case of tomatoes.

The secretary said about 3.8 million tonnes of onions are reported to be in storage with farmers and traders.

The government sold tomatoes at ₹60/kg starting 29 July, when the price of this essential kitchen item had crossed the ₹80/kg mark. Tomato prices surged due to supply disruptions caused by rains and the sale was stopped once prices cooled.