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Commodity Politics: Why politicians hate Onions

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By Vivek Anand
NEW DELHI: Do you know which are the commodities that Indian politicians love? Yes, you guessed it. It is neither gold, diamond nor silver. But your daily staple of onions is putting the ruling Congress government virtually in tears these days.

Reason: There has been a severe shortage of onions these days. And the current shortage comes at an ‘inappropriate’ time as far as political parties are concerned. If the heady political goings-on are to be believed, everything is wrong between the Left parties and the ruling Congress party that a mid term general election is round the corner.

So, it is not just the India-US nuclear deal that is troubling the Manmohan Singh government these days. Increasing prices of onion is turning out to be a major political issue for the government. Onion prices have risen by 11 percent in the past one week in the wholesale markets in north India as production of the essential commodity has drastically come down.

Onion costs around Rs 20 a kg now in the Delhi market. Political observers say it was the rising onion prices that resulted in the debacle of BJP's in assembly elections to Delhi and Rajasthan in 1998.

“Situation is the same now and rising onion prices could threaten the Sheila Dikshit government in Delhi,” said Arvind Malhotra, a BJP supporter in Delhi. He said the government has not taken any measures to contain the union prices in the last few weeks. The onion arrivals in Delhi, one of the largest consuming centre of the country, dipped to about 600 tons yesterday from 1,050 tons last week.

In fact, if you look back to history, high onion prices have often hit several governments in the past.

Indian politicians hate onions. Onion is the largest vegetable produced and consumed not only in India but also in the world. And a shortage of this essential commodity always heats up political debate, and political parties in power have always been hit by high onion prices and severe shortages.

Although, onion is classified as vegetable, it has special qualities, which add to taste and flavour to food and hence it is mainly used in India cuisine and culinary preparations. In addition to its use in cuisine, it is also relished in raw form with meals. Onion is consumed by all classes of people-poor and rich and hence assumes a place of essential item.

Now that, elections are looming large, the Manmohan Singh is even turning to unlikely corner to import the essential commodity—from Pakistan.

On Monday, officials of the Agriculture Ministry and the National Agricultural Co-operative Marketing Federation of India (Nafed) discussed the onion shortage and decided that the commodity could be imported from Pakistan if the need arises.

Officials said Nafed has been entrusted to talk to traders in Pakistan about the availability of onions there and the likely export price. “We are not clear as of now whether Pakistan has sufficient stock to export and whether there is price parity,” a senior official said.

With heavy demand during the month of Ramzan, Pakistan has itself been buying onions from the neighbouring markets of Afghanistan and Iran.

This kharif season saw a jump of 16% in the area under onion cultivation, which could lead to a 20% jump in production. Onions are cultivated in Andhra Pradesh, Karnataka, Tamil Nadu and Maharashtra. Harvesting has begun in the southern states, where the crop is sown early.

The government has imposed a temporary ban on export of onions for 15 days, starting October 1. It has also increased the minimum export price for onions by $50 per tonne to $495 per tonne for Gulf destinations. India exported 1.13 million tonnes onions in 2006-07. Onion is exported from India to in all 38 countries in varying quantities.

Festival demands and news of unexpected rains affecting standing crops helped spiral onion prices in domestic market. Wholesale price of onion doubled in Delhi from Rs.1,450 a quintal last week to Rs.2,125-2,375 this week.
MCX COPPER MINI 29 June 2012 contract was trading at Rs 403.85 , up Rs. 5.25 . What's your view on it?
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