Food Price Surge Puts Strain On India's Poor

toggle caption Manish Swarup/AP

Consumers in India are being stretched by a surge in food prices, which rose by more than 14 percent in December alone.

While price hikes have put many staple foods out of reach for India's poor, the cost of onions is stirring the greatest outrage. Onions, a pungent mainstay of Indian cooking, have jumped in price by 40 percent in the past year.

Analysts blame crop failures and a food distribution system that allows middlemen to manipulate food prices.

Onions are in short supply in the vegetable stalls that line the narrow alleys of south Delhi's I.N.A. market.

Grocer R.L. Setty says an unusually wet summer made for a poor harvest in many areas, that there were fewer onions, and the quality wasn't much good. Setty says he's hoping the price crunch will ease when the government starts bringing imported onions to Delhi next week.

Virender Khaneja, who sells spices at the Durga Masala Store, says it's not just onions -- he's paying higher wholesale prices for all sorts of spices as well.

Khaneja says middlemen are creating fake scarcities by holding back certain commodities until the prices rise.

"Some market mafia are there," he says. "They keep five, six tonnes, maybe 10 tonnes [of produce] on the side," until the price goes up.

Ripul Oberoi, a doctor shopping at the market with his wife, says the result is that prices seem to go higher every day. "And for a consumer, for a middle-class person, or slightly below middle class, it's very difficult to have the daily routine items that everybody has to have to survive," he says.

Jayati Ghosh, a professor of economics at Jawaharlal Nehru University in Delhi, says the real pain is being felt by India's poor majority.

For most middle-class people, food is a relatively small part of the budget, she says, "but here, for about 60 percent of the population, if the price of food goes up by 10 percent, that means one less meal a day, it means children not getting milk. We're talking about very severe effects."

Ghosh blames the Indian government, which she says doesn't have an effective policy for managing food. She says the government needs to set up a system that can provide critical foods at reasonable prices that would dampen the effect of speculation in the marketplace.

"I'm not going to do away with private, obviously not, and especially small traders are critical in the whole system. But you have to have a system that provides the essential food items, which is basic food grain, basic vegetables, edible oils, sugar," she says.

Ghosh rejects the criticism that such a system would be a turn away from the free-market ideas that India has embraced during its surging economic growth. She notes that the United States has similar programs, such as food stamps, designed to make food available to the lowest-income Americans.

"I think there are some things that are just too important to be left to the free market, and food is one of them, because food is essential," Ghosh says. "You have to feed your population. You can't say, 'Well, too bad. If you don't have the money you can just starve to death.' So food has to be managed."

India's government has taken short-term steps to manage the onion crisis, such as banning the export of Indian onions and importing onions from abroad.

The political leaders have every reason to be leery. Anger over high food prices, and especially onion prices, has contributed to election losses for India's ruling parties in the past -- and many fear it could happen again.