The Union government has introduced a 40 per cent export duty on onions until December 31 of this year, as per a gazette notification published on Saturday. This duty will be effective immediately. This decision is prompted by the ongoing surge in onion prices this month. Earlier, in a bid to control the price of rice, the government banned the export of non-basmati white rice.
The price of Onion has been rising for fast few weeks. Onion prices were anticipated to rise in the retail market by the end of August, with a further increase expected to reach around Rs 60-70 per kg next month, said a PTI report last week. The report citing Crisil Market Intelligence and Analytics said that this surge is attributed to tightened supplies.
Crisil Market Intelligence and Analytics said that the supply-demand imbalance is likely to impact onion prices towards the end of August. It anticipated a substantial rise in prices from early September, reaching up to Rs 60-70 per kg during a lean period. However, these rates are predicted to remain below the levels recorded in 2020.
The report also highlights that due to a reduced shelf life of rabi (winter) onions and panic selling earlier this year, the rabi stocks in the open market are expected to decline significantly by the end of August, rather than in September. This extension of the lean season by 15-20 days is projected to lead to tightened supplies and elevated prices.
This move also comes after the surging Tomato prices since July. The government has started to provide subsidised tomato to provide relief to consumers. The RBI bulletin released on Thursday noted that tomato prices experienced an upward trend in August, although more recent data suggest a slight decline in rates. The bulletin highlighted that both onion and potato prices have seen a sequential increase.
On August 11, the central government had announced the release of onion from its buffer stock in the targeted regions with immediate effect to ensure prices remain under check until the new crop arrives from October onwards, a PTI report said.
The Centre said that it exploring several options for the disposal of onion: e-auction, e-commerce as well as through states at discounted rates via retail outlets of their consumer cooperatives and corporations, it said, while it is currently maintaining 3 lakh tonnes of onion under the Price Stabilisation Fund (PSF) to meet any exigencies, if rates go up significantly during the lean supply season.