Representative image.
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To control the surge in onion price, which is projected to more than double in a couple of months, the central government on Friday said it has decided to release the critical staple from its 3 lakh tonnes of buffer stock built under the price stabilisation fund.
Modalities for the release of onion from the buffer stock was finalised on Thursday in a meeting of the managing directors of two central nodal agencies National Agricultural Cooperative Marketing Federation of India Ltd (NAFED) and National Cooperative Consumers' Federation of India Limited (NCCF) with secretary of Department of Consumer Affairs Rohit Kumar Singh.
As per the modalities agreed upon, onion from buffer stock will be released in selected markets in states or regions where retail prices are ruling above the all-India average and also where the rates of increase in prices over previous month and year are above threshold level, the Ministry of Consumer Affairs, Food & Public Distribution said in a statement.
“The quantity and pace of disposal will also be calibrated with the prices and availability situations with the objective of making onion available to consumers at affordable prices,” the ministry said.
The government is also considering disposal of onion from the buffer stock through e-auction and retail sales on e-commerce platforms. Apart from market disposal, the centre has also decided to offer onions to states at discounted rates for sale through retail outlets of their consumer cooperatives and corporations.
NAFED and NCCF have procured 1.50 lakh tonnes of rabi onion each during June and July this year from Maharashtra and Madhya Pradesh. The total buffer stock by these two central nodal agencies stands at 3 lakh tonnes.
Onion buffer stock maintained under the Price Stabilisation Fund, has tripled in the past four years, from 1 lakh tonnes in 2020-21 to 3 lakh metric tonnes in 2023-24. The objective behind the buffer stock is to curb price fluctuations.
Onion prices have risen in the past few weeks and are estimated to witness a sharp jump by next month. “As per our ground interactions, prices are expected to show significant increase from early September in the retail market, reaching up to Rs 60-70/kg during the lean patch,” rating agency CRISIL said in a report recently.
There are two main reasons for the possible surge in onion prices. First, low shelf life of onion produced in rabi season, and second, poor sowing in kharif season.
Retail inflation in onion, which was in the negative zone from September 2021 to May 2023, rose to 1.65% in June, as per the latest available data. It is estimated to surge in July and subsequent months leading to further spike in food inflation. The Reserve Bank of India on Thursday raised its retail inflation projection for July-September quarter by 100 basis points to 6.2% citing upturn in food prices.