Page 564 - ES 2020-21_Volume-1-2 [28-01-21]

Prices and Inflation 191

Why Price Spikes in August to November?
Rabi harvesting takes place between March and May in most states and the crop is sold
during June-July period, kharif harvesting takes place between October and November and
the crop is available in the market till rabi harvest. The period between the two that is August
to November is when we observe the prices of onion rise sharply.

Recent policy measures by government:

Government has ensured that various pro-active measures are taken to curtail onion price
rise. On 23.10.2020, stock limit on the onions was imposed under the Essential Commodities
(Amendment) Act 2020 (25 MT for Wholesalers and 2 MT for Retailers) for a period up to
31.12.2020. In order to moderate the price rise, the government took a pre-emptive step by
announcing a ban on onion export on 14.09.2020 so as to ensure availability to domestic
consumers at reasonable rates, before the expected arrival of Kharif onion. The government
also stepped-up disposal of onion through the built-up onion buffer stock from the Rabi onion
2020 of 1 LMT which was doubled since the quantity of last year. Further, Onions are also
being disposed off through Open Market Sales. The government has also facilitated the import
by the private traders, it has also been decided that MMTC would import red onions to meet
the demand supply gap.

Effectiveness of government measures
In 2019, NAFED created buffer stock of approx. 58288 tonnes, out of which around 18808
tonnes of onions were damaged, 33313 tonnes were distributed in the local market due
to being of sub-standard quality and only 6167 tonnes could be distributed to states. This
time, NAFED has created around 99000 tonnes, out of which 25,000 tonnes are likely to
be damaged, however, stocks actually distributed to states are still low at 11653 tonnes (till
November 2020).
Onion stock position

Source: NAFED
* dispatch to state government and local market under process