How rising onion prices may hurt PM Modi's govt more than tomatoes | Explainer | Mint
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Business News/ News / India/  How rising onion prices may hurt PM Modi's govt more than tomatoes | Explainer
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How rising onion prices may hurt PM Modi's govt more than tomatoes | Explainer

PM Modi faces challenge of rising food inflation with skyrocketing onion prices. Onions crucial to Indian diets and historically linked to downfall of governments. Stable food prices crucial for Modi's re-election bid.

Govt imposes 40% export duty on onions (HT PHOTO)Premium
Govt imposes 40% export duty on onions (HT PHOTO)

Prime Minister Narendra Modi, who recently expressed confidence about returning to power for the third time during the 76th Independence Day speech, is facing a big challenge pertaining to a steady rise in food inflation, as per the economists.

While the common men have not yet overcome from the shock of tomatoes price, onions' rates have already skyrocketed.

Historical evidences have shown that soaring prices of staple crops have always been a red flag for any incumbent government in India. Henceforth, the BJP government is striving hard in putting the lid on uncontrolled food prices.

'HIGH COST OF ONION'

The prices of onions are steadily rising and therefore the Central government has decided to impose a 40% export duty on onions. The government is also planning to sell them at subsidised rates.

The vegetable stands alongside tomatoes and potatoes as part of a trio of crops so crucial to Indian diets. However, consumers in India are more sensitive to onions — a vegetable that’s hard to be replaced with any other commodity in many local cuisines — than tomatoes and potatoes.

The government is already facing fierce criticism after tomato prices rocketed as much as eight-fold due to extreme monsoon rainfall this year. The cost of tomatoes has been falling, but a steady rise in onions put the authorities on high alert.

'DON'T MESS WITH ONIONS'

In Indian political history, onions have a deep connection in bringing down the governments. In 1980, the former Prime Minister of India called the General election an 'onion election'. The skyrocketing onion prices contributed to the fall of the first non-Congress government post-Independence. During the winter session of Parliament that year, Lok Dal’s Rameshwaram Singh walked into the Rajya Sabha wearing a garland made of onions.

Another humour around onion prices was observed in 1998. Congressman Chhagan Bhujbal sent a box of onions to the then Maharashtra Chief Minister Manohar Joshi and said, "Diwali is a festival where you give something precious. This time, onions are very precious".

However, the hike in onion prices turned into a threat to late BJP MP Sushma Swaraj. It was October 11, 1998. Swaraj had been made the chief minister of Delhi, replacing Sahib Singh Verma. The country was gearing up for Diwali and the price of onions had touched 60 a kg. Despite her best efforts at setting up Fair Price Shops, and quashing rumours about the scarcity of onions, there was no coming back for her as Delhi's CM.

Stable food prices are crucial for PM Modi, who will seek a third five-year term in national elections next year. Retail inflation is running at a 15-month high, underscoring the scale of the challenge. The government has curbed exports of wheat, rice, and sugar, and may scrap a 40% tariff on wheat imports. It’s selling tomatoes and grain in the open market and curbed stockpiling of some crops.

EL NINO THREAT

According to the Bloomberg News agency, an El Niño-induced spell of poor weather may hurt onion crops in the top-growing state of Maharashtra, where precipitation is already below average. Monsoon rains overall in India have been about 7% below normal, helping push up food prices. Wheat has risen 12% in Delhi from a year earlier. Rice costs 22% more, tomatoes are up 80%, while onions have increased 32%.

Maharashtra is the country’s top producer of onions, accounting for more than 40% of output. They are grown three times a year, twice in the rainy season and once during winter. Rains in parts of the state have been 18% below normal, stressing crops and making the government nervous ahead of the 2024 Lok Sabha election, the agency added.

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Published: 22 Aug 2023, 10:11 AM IST
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