Government to sell 7 lakh tonnes of onions by the end of February in order to lower the price per kilogramme to Rs 35.

Onion prices have been bringing tears as domestic prices stay elevated for over 4 months

In an effort to rein in onion prices, which have increased by 48 per cent, the government is amassing a massive buffer stock, which in November contributed to a higher-than-average inflation rate of 5.55 per cent.

The government has already prohibited the edible bulb's exports because general elections are soon.

"We are continuing to procure the commodity to bring it to 7 lakh tonnes, and we have built up a substantial buffer of 5 lakh tonnes." In order to lower prices, we are also offloading this buffer concurrently. When the buffer runs out in late February, prices should drop to around Rs 35 per kilogramme, and by March, they should return to normal levels of around Rs 20, according to Consumer Affairs Secretary Rohit Kumar Singh, who spoke with Moneycontrol.

As of December 12, the average price of onions throughout India is Rs 55.12 per kilogram.

Up until now, the government has purchased roughly 5.10 lakh tonnes of onions and offloaded 2.72 lakh tonnes in expensive markets through both open markets and direct retail sales to customers.

Data indicates that government-held buffers keep prices under control, giving us a strong buffer to step in further. Then, traders are aware that they cannot control the market, according to Singh.

Export ban

In an effort to keep domestic prices under control, on August 19, the Centre decided to buy an extra 200,000 tonnes of onions from farmers while also enacting a 40 per cent export duty on onions. But because prices did not decline much, on October 29 it also announced a minimum export price (MEP) of $800 per million tonnes (free-on-board basis).

"But even with MEP, we observed that over a lakh tonne of exports were made each month because other neighbouring countries' onion prices remained high," the secretary continued.

The MEP was first implemented on December 31 and was later extended to a complete export prohibition through March 2024.

Delays in Kharif arrivals, export restrictions by Egypt and Turkey, hailstorms during Kharif crops, and high global retail prices as a result of availability worries have all been blamed for the price increase.

After the kitchen staple's retail sale price in the national capital surpassed Rs 80 per kg, while prices in the mandis stayed around Rs 60 per kg, exports of this staple were ultimately outlawed. Since July, the Consumer Price Index basket's onion inflation has been in double digits, with a nearly four-year high of 42.1 per cent in October.