Commodity Online NEW DELHI: It seems the government is on a panic mode as far as inflation is concerned. After tightening the cash flow through bank loans, the government is now targeting food items to rein in prices.
In an apparent effort to check rising inflation, the Centre has increased the minimum export price (MEP) of onion by $25 (about 15 per cent) to $185 a tonne (Rs 8,000 approximately) from July 1.
This is aimed at checking the price as onion prices had moved up drastically in the recent past. But, the prices are now down but the government doesn’t want to take a risk on that front.
It may be recalled that the BJP had lost last elections due to the rising onion prices.
In June, the MEP was cut by $25 a tonne to boost onion exports. However, the decision to raise the MEP was taken following a rise in retail prices from Rs 6 to Rs 10 a kg in June.
The MEP may be raised further around mid-July if retail prices continue to move up. The wholesale price index (WPI)-based inflation for the week ended June 14 had touched a 13-year high of 11.42 per cent.
Wholesale prices in the Delhi mandi have jumped to Rs 400-600 a quintal from Rs 250-400 quintal a month ago.
Onion exports during April-June jumped around 24 per cent to 310,000 tonnes. An over 7.5 per cent depreciation in the rupee since April is also helping exports.
However, exports in 2007-08 stood at 996,057 tonnes, down 14 per cent from 1,161,062 tonnes in the previous year. Regulatory moves to control domestic prices led to this decline.
According to officials, onion output for 2007-08 is estimated at 7.45 million tonnes, up nearly 12 per cent from last year’s 6.66 million tonnes.
