Finance

Volatility in onion prices can be managed through appropriate measures, says Niti Aayog member

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NEW DELHI: As rising onion prices have become a cause of concern, Niti Aayog has suggested that the volatility in onion prices can be managed through appropriate mechanism and intervention as past price trends show a clear pattern in price spikes and high prices rule only for a few months.

The Aayog also slammed previous governments for absence of effective response.

Niti Aayog member Ramesh Chand said, “These measures include enhancing of storage infrastructure, stocking of onion by central agencies like Nafed, state-level entities and public parastatals (agency owned or controlled wholly or partly by the government).”

He suggested promoting onion cultivation in other states including Uttar Pradesh and popularizing onion production in kharif season.

Attacking past governments for failure to come out with any effective response, Chand said, “Till recently, any abnormal rise in onion price was attributed to unfavourable weather and exploitation of situation by traders and so called cartelization, hoarding etc and it was forgotten when prices rolled back to normal.”

He added, “Absence of effective response to onion price shocks in the past indicates that such shocks were treated as inevitable rather than seeking a solution to avoid their recurrence.”

In his blog, Chand pointed out that it was ironical that sharp price spikes were experienced almost every third year despite impressive growth in onion production in the country, which has risen to above 19 million tonnes in recent years.

He argued that India experienced an annual growth rate of above 13% in onion production during the last 13 years since 2000-01, which has not been matched by any other food crop in recent times, but domestic and overseas demand for onion seems to be outpacing growth in supply.

Arguing that per capita availability of onion had risen to more than 13 kg in recent years from 4 kg in 2002-03, an increase of 12% every year, the Niti Aayog member said, “It looks strange that increased availability is associated with increase in price volatility rather than providing flexibility to absorb small shocks in supply.”

He, however, said the primary factor for triggering abnormal hike in prices was production shock generally caused by weather related events.

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