Onion Express chugs off. Destination: Price control.
With festival demand peaking, the government has dispatched 1,700-tonne onion trains to key cities and started sales from buffer stocks to keep inflation in check and prevent any political fallout.
New Delhi: More than a decade after soaring onion prices contributed to the Congress party’s loss in the Delhi assembly elections, the Centre is taking no chances this festival season.
With demand peaking ahead of Diwali and other regional festivities, the government has intensified market interventions, dispatching special “onion trains" to cities including Guwahati, Kolkata, and Chandigarh, two officials directly involved in the process told Mint.
The special trains, which can carry up to 1,700 tonnes each, supplement the traditional truck supply, typically limited to 25 tonnes per vehicle, allowing a much faster and larger distribution to high-demand regions.
One official said these trains are part of a broader strategy combining buffer stocks, market monitoring, and coordination with state authorities to curb hoarding and prevent excessive markups.
Under the Price Stabilisation Fund (PSF), the government has procured 300,000 tonnes of onions. Retail sales began on 4 September at ₹24 per kg and were subsequently reduced to ₹20 per kg to ease prices in the market, said the official.
These timely interventions are essential to prevent inflationary pressures during the festive period and reassure consumers of adequate stocks, said the second official.
Retail prices already reflect the impact of these measures. As of 21 September, onions sold at ₹32 per kg in Delhi, down from ₹57 a year ago. In Mumbai, the price was ₹30 per kg versus ₹58 last year, while Chennai saw ₹30 compared with ₹60. Ranchi recorded ₹25 per kg, down from ₹60.
The all-India average retail price stands at ₹25.97 per kg, a clear contrast to the northeast region, where prices remain higher at ₹36.06 per kg. The trains to Guwahati are expected to meet the region’s needs and help temper price volatility during the festive season.
Towards the end of the monsoon season, onion prices typically soar to ₹80–100 per kg. This year, however, they are hovering at ₹40–50 per kg. Government estimates put India’s onion output at 30.771 million tonnes, about 27% higher than last year, helping ensure adequate supply ahead of festival demand.
Inflationary pressure
Food prices are a key driver of India’s consumer inflation. Even modest fluctuations in staples like onions can ripple through the Consumer Price Index (CPI).
Retail inflation rose in August to 2.07% year-on-year from 1.61% in July, led by higher prices for tomatoes, eggs, meat, and fish, according to provisional data from the statistics ministry. While inflation remains within the Reserve Bank of India’s 2-6% target band, erratic weather and uneven crop yields could complicate the outlook.
Onions, which account for a significant share of vegetable price volatility, have historically driven spikes in food inflation. In September 2024, vegetable inflation contributed 63% to overall food price increases, with year-on-year rises of 66.2% for onions, 42.4% for tomatoes, and 65.3% for potatoes. Short crop cycles, storage challenges, and regional production concentration continue to amplify these swings.
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