Govt Implements 40% Export Duty & Buffer Stock Release to Tackle Rising Onion Prices

In a bid to counter the escalating prices of essential vegetables and rein in the surging inflation, the Indian government has taken decisive measures. A 40 per cent export duty has been imposed on onions, effective until the end of 2023. This move comes as part of the government's strategy to address supply-side challenges and control the prices of key vegetables in the wake of a staggering increase in costs.

Recent data released on August 14 has unveiled that India's headline retail inflation has surged to a 15-month high of 7.44 per cent in July. The primary catalyst for this inflationary spike was the substantial surge in tomato prices. While experts anticipate that onion prices might not experience the same level of escalation, a similar upward trend could be seen due to the prevailing supply-related constraints.

Reports from various sources indicate that onion prices have registered significant hikes across major markets throughout the country. Notably, prices have even doubled in certain regions, including Maharashtra's renowned Pimpalgaon and Lasalgoan Agriculture Market Committee – the largest onion market in Asia. Analysts attribute this price surge to speculative buying triggered by reduced onion acreage during the monsoon season and depleted carry-forward stocks from the previous crop cycle.

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In response to these mounting challenges, the government has initiated a series of strategic interventions to curb the inflationary pressure on essential food items. One such step involves the suspension of non-basmati white rice exports. This is part of a broader approach to contain the rise in prices of various commodities, including cereals, pulses, and milk, which have been putting a strain on household budgets.

Moreover, the government has unveiled a plan to release onions from its buffer stock in targeted regions. This immediate measure aims to stabilize prices until the arrival of the new crop in October. The authorities are exploring various avenues for the efficient disposal of onions, including e-auctions, e-commerce platforms, and discounted sales through state-owned retail outlets.

Presently, the government has strategically reserved a stockpile of 3 lakh tonnes of onions under the Price Stabilisation Fund (PSF) to address any exigencies arising from a significant price hike during the lean supply season. Recent government data indicates that onion prices have started to climb, with the all-India retail price reaching Rs 27.90 per kilogram on August 10. This represents a rise of slightly over Rs 2 per kilogram from the corresponding period in the previous year.

It is worth noting that the Rabi onion, harvested between April and June, accounts for a substantial 65 per cent of India's overall onion production. This harvest caters to consumer demand until the arrival of the Kharif crop in October and November.

As the government continues to navigate the complex landscape of fluctuating vegetable prices and supply dynamics, these concerted efforts are aimed at mitigating the impact of inflation on citizens' daily lives. With a multi-pronged strategy that encompasses export duty imposition, buffer stock release, and targeted interventions, the government remains steadfast in its commitment to stabilize food prices and ensure economic resilience.

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