Onion retail prices touched Rs 90-100 in all major cities in the country as of Thursday. (Photo: Reuters)

A looming onion crisis in India has not only left citizens teary-eyed but it is also spiralling into a major concern for the Narendra Modi-led NDA government, which is already facing criticism over the country's lacklustre economic growth.

Households and restaurants in India are reeling under pressure as onion prices have surged exponentially across the country. A kilo of onion is retailing at Rs 90-100 in most Indian states, peaking at Rs 120-130 per kilo in major cities like Kolkata, Chennai, Mumbai, Odisha, and Pune.

Onion price across all major retail stores in major cities have crossed Rs 100 per kilo. (Photo: Reuters)

Though an onion crisis is not new in India, last time the retail price of the bulb crop touched Rs 100 per kilo in 2013, it was among one of the reasons which led to a shift in power at the Centre the following year.

As per reports coming in from wholesale and retail markets across the country, the situation in 2019 looks far worse. So much so that thieves are opting to steal onions over cashand people arehaving fist-fights over the kitchen staple.

Not only is the fresh hike in onion prices having far-reaching consequences on households but scores of small restaurants have also been forced to reduce using the bulb crop. Traders, wholesalers, and farmers have been equally affected as people cut down on using the kitchen staple.

Though many are trying to substitute costly onions with other cheaper alternatives like cabbage and radish, it is almost impossible to completely junk onions, a kitchen favourite in most households in India.

Therefore, people are now left with no choice but to incur higher costs to buy onions.

THE VICIOUS ONION CYCLE

This is the second time onion prices increased after the government had earlier banned export and imposed a stock limit on traders to stabilise rising rates in October. It had even increased the Minimum Export Price for onions to $850 per tonne, making it very difficult for traders to export.

On Wednesday, an official government statement indicated that the stockholding limit on traders (retailers and wholesalers) has been extended until further orders.

Onion traders have expressed dissatisfaction over the government's orders to limit stockholding and export of the commodity. (Photo: Reuters)

The reason behind the fresh hike in onion prices can be attributed to higher wholesale rates triggered by unseasonal rainfalls in Karnataka, Gujarat and Maharashtra, the largest onion growing state in the country.

The wholesale price of onions reached Rs 65 per kilo at the Lasalgaon APMC mandi, the largest in the country.

While wholesale and retail price of onions had almost normalised after the government banned the export of onions of all varieties on September 30, 2019, the situation has further worsened.

A vegetable vendor from Nagpur recently told ANI that they are purchasing onions at a higher rate of Rs 60-70 per kilogram and are selling it at Rs 80 per kilo in the market. "So, due to the rise in price, customers are buying only 250-500 grams of onions," the vendor said.

Since retailers are selling onions at higher rates, customers have either cut off onions completely from their menu or reduced it drastically.

This is neither good for the country's farmers or traders, who are witnessing a fall in demand, which could lead to further disruptions in the country's onion trade.

Almost all states across India are paying Rs 90-100 minimum for a kilo of onions as of Thursday. The price is even more in south Indian states, where prices have even shot to Rs 130 per kilo. In Delhi, too, onion prices are retailing at Rs 70-90 per kilo.

While Delhi Chief Minister Arvind Kejriwal accused the Centre on Wednesday of stopping the supply of the kitchen staple at controlled price, the government on Wednesday clarified that it is taking all possible steps to normalise prices.

"It's not in our hand, the government is making maximum efforts but who can win from nature," said Food and Consumer Affairs Minister Ram Vilas Paswan.

Minister of Consumer Affairs, Food and Public Distribution Ram Vilas Paswan (File Photo)

The government has already placed orders for 6,090 tonnes of onions from Egypt in order to fight the crisis and the consignments are likely to arrive in India in December.

Department of Consumer Affairs Secretary AK Srivastava has indicated that the imported onions will be sold at a price of Rs 52-55 per kilo in Delhi while it will retail at Rs 60 per kilo in Delhi.

GOVT'S DILEMMA: FARMER OR CONSUMER?

Rising onion prices is shaping as a major worry for the Narendra Modi-led government, which seems to be caught in a dilemma: increasing farm income or keeping inflation in check.

ONION TROUBLE:October retail inflation breaches RBI's medium-term target

PM Modi's government had promised to increase farm incomes as part of its election campaign earlier this year, but it also has to keep food inflation in check.

Experts said it would be tough for the government to announce any move to reduce rising onion prices as any further check puts the Modi government's farmer-friendly agenda at risk.

Any further subsidy or reduction for consumers could hit incomes of onion farmers.

Since farmers and traders in some areas have already started protesting against the government's curb order on exports, any other move to bring down onion prices could lead to further unrest.

In fact, banning onion exports has led to a massive reduction in farmers' income as well.

A recent video shared by Congress spokesperson Sunil Ahire shows a farmer from Maharashtra who is being forced to sell onions at Rs 8 per kilo, which is nearly 15 times less than the rate consumers are currently paying for a kilo of onion.

But why such a drastic difference in rates? Let us explain.

An earlier India Today TV ground report from Maharashtra, home to the largest onion wholesale markets, show only traders are benefitting from the unusual price hike.

Shashikant Dasgude, Agriculture Produce Market Committee (APMC) Chairman from Shirur tehsil, said traders indulge in hoarding and later selling at inflated prices.

While farmers are still selling stacked onions at dirt cheap rates, the middlemen (wholesalers and traders) continue hoarding the bulb crop, despite government orders, to reap higher profits.

In such a situation, the government needs to check whether the traders are actually following the orders passed to prevent price hike as the situation keeps worsening on a daily basis.

At present, retailers can stock onion only up to 100 quintals and wholesale traders are allowed to keep up to 500 quintals.

The government has to act soon if it wants to keep food inflation in check at a time when India is facing an economic slowdown.

ONION POLITICS IN INDIA

The Narendra Modi government recently came under fire for failing to control rising onion prices but such instances have been witnessed before in Indian politics.

POLITICAL OUTLOOK:Onion bomb and Modi government's dilemma

Having said that, the onion crisis in 2010 and 2013 reminds how errant rainfall in onion producing regions led to heightened political tension in the country and even led to the collapse of the UPA government.

In 2010, unseasonal rainfall and excessive flooding in key onion producing regions like Nashik in Maharashtra failed to supply adequate onions to the market as most crops were destroyed. Onion prices skyrocketed to almost Rs 90 per kilo at the time.

To control the growing crisis, the Manmohan Singh government acted immediately and banned onion exports, lowered import tax, and even imported onions from neighbouring Pakistan.

All the measures finally resulted in relief as onion prices dropped to Rs 50 per kilo. The hike in onion prices in 2010 was also a result of continued hoarding by wholesale traders and retailers, who made profits of Rs 1,00,000 per day.

The Bharatiya Janata Party, which was an opposition party at the time, came down hard on the Congress government and blamed flawed policy decisions on exports and imports for the onion crisis. It led to massive protests at the time.

A repeat of the onion crisis was also witnessed in 2013 and BJP again came down hard on the UPA regime.

Narendra Modi had raised many questions over rising onions prices when UPA was in power in 2013. (Photo: Reuters)

Even Prime Minister Narendra Modi had attacked the Congress over the rising onion prices in 2013.

A year later, the UPA government was voted out of power. Though there were other factors in play, increased price of the kitchen staple also played a significant part in the downfall.

Onions have had an even bigger impact on Indian politics. In 1998, the rising price of onions determined election outcomes in Delhi and Rajasthan.

In Delhi, the late Sushma Swaraj-led government faced the wrath of angry citizens as BJP lost the state polls to Congress despite performing well in Lok Sabha polls in Delhi months ago.

It also helped Indira Gandhi return to power in 1980 general elections-later termed as the "onion elections"-after her government was voted out in 1977. Gandhi used it as an effective tool to oust the Janata Alliance government which could find any cure to rising food inflation.

Now, in 2019, the onion crisis looks even more devastating as prices in India have touched a new high.

Experts suggest that the situation is likely to normalise in December when fresh harvests will hit the market. However, if onion prices do not come down by next month, it could leave the government in tears as well.