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Last updated: September 11, 2014 at 11:07 am

Sky-high Onion Prices & its economic impact !

Love to top-up your maska Pav-bhaji with raw onions? Think twice!

The Aam-aadmi has already reduced his intake of onions as a part of his daily diet. Though, I am a bit late to report on this topic, sky-rocketing onion prices are literally bringing tears to the eyes of homemakers and hoteliers alike; not to mention the poor people who rely on it day in and day out.

The members of the Indian Hotel and Restaurant Association (AHAR) have resolved to hike prices of some of the most sought after delicacies on their menu cards by at least 20 to 25%. Restaurant owners are already feeling helpless by rising onion and tomato prices.

Onion prices in India

A week ago, the onion prices had touched dizzy levels of Rs.75-85 per kg in some of the top metro cities of the countries on the back of untimely rains in Andhra Pradesh and poor crop in Maharashtra. The spurt was further fuelled by the speculative interest and black-marketing of onions.

For once, I would like to point out that onions have the power to bring down the government in a democratic country like India. Does that sound over-stated? Well, that’s not a hypothetical thought if one were to say that Apples were cheaper than Onions at one point of time.

In fact, if onion and tomato prices go completely out of hand, it could work out as an ideal recipe to spell doom for the common people relying on these two primary food articles as a core part of their staple diet.

Even as I am writing this, the onion prices have stabilized a bit around Rs.55-65 a kg on the back of imposition of export ban by the government; but they’re still no where near to the levels it quoted a month ago in the retail mandi.

Moreover, even as the froth developing around onions shows some signs of cooling down, the prices of tomatoes and garlic have already raised their bids to join the party with onions, making matters worse for the poor. Tomatoes were sold at Rs.60 a kg in Mumbai and Garlic quoted at Rs.300 per kg in Delhi.

If you’re from one of those well-to-do families or income groups who do not care about spike in prices of food articles, I would like to alert you- not to under-estimate the inflationary pressures exerted by the food articles.

Sustenance of food inflation at higher levels could also lead to an up-tick in EMIs of your home loans; as interest rates start inching northwards powered to cool down inflationary pressures as may be perceived by the country’s Apex bank.

A note to Aseem: If you’re actually reading this article, you might as well realize that you missed including this burning issue of rising Onion prices in your Top-10 list of disasters in 2010 :)

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9 Comments

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  • i think instead of blaming any agency i will blame the policy and short sightedness(some time money make you blind) of indian govt. The things are going similar like SUGAR and here it goes :delhi’s CM introduced new outlets which are selling onions at Rs 40.The actual price of onions is Rs 10.(profit of 400%) Now my point is that actually farmer is not benefited by the price hike middle people(between farmers and consumers) are making all profits.

    • Pushpendra, Agreed with your views… Its actually the intermediaries that are lapping up the price gains out of this unusual situation. Even if the farmers were to reap even partial dividends from this price rise, it would go a long way in protecting their interests during such price spurts.

  • After reading the article, I would have to agree with Mr. Rahman. The basic commodities are going to go up in price and possible hyperinflation, so why not participate in the trading, buying, and selling of commodities. Now is the time to get in and participate rather than watch!

  • I am not sure of the following hypothetical scene is practical or not. People should start participating in commodities trading from exchanges. They should buy when the commodities are low and carry forward. If the commodities go higher and if they require onions or tomatos at home, take delivery instead of selling in exchange :) On a serioous note, I read that there is a knock on effect felt as far as Emirates where due to shortage of onion reaching from India prices doubled in a week.

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