Slapping a blanket ban on onion exports will be a knee-jerk reaction and the answer to tide over the problem of runaway rise in prices lies in going in for large scale imports by the state-owned firms like STC, PEC, NAFED and other cooperatives, ASSOCHAM said Wednesday.
"Putting a ban on export will be counter-productive in the long run and would harm interest of not only the exporters but mainly the farmers. The flip-flop in export policy destroys the country's reputation as a reliable and credible supplier," the ASSOCHAM said expressing concern over the spurt in prices of onion.
In any case, when domestic prices are much more than the international prices, where is the big incentive for traders to ship the commodity abroad. At this point of time, the average international price is half a dollar for a kg whereas in the domestic market, it is selling at USD 1.30-1.40 a kg. It is only the firm orders booked in the past which would be shipped in any case. "Thus, putting a ban would not help much. Instead it would damage India's reputation in the international market," said D S Rawat, Secretary General ASSOCHAM.
It said ironically, the spurt has come about at a time when the prospects for overall inflation inching down had improved following widespread and more than adequate Monsoon rains. "One single item is causing huge damage to the overall sentiment which will add to the inflationary expectations and perceptions, something the country can ill-afford," said Rawat.
The answer to the onion problem lies in immediate floating of big size tenders by the state enterprises for import of onion, preferably from the nearby countries like Pakistan, Indonesia, Bangladesh, Turkey and Ukraine.
Once the supplies come, the utmost and the most immediate steps should be taken to ensure that the consignments are cleared immediately from the ports and despatched to the open market mandis all over the country. A strong message must go from the government machinery- both Centre and the states- that the supply would be continuously augmented.
Even as political tempers are running high with Pakistan, the bilateral trade continues. "Trade channels with Pakistan should also be used to augment supply of onion. But unlike in the past, the supply should be ensured through the Wagah border from Pakistan's Punjab and not via the tedious Karachi-Mumbai route," added Rawat.
The average wholesale price of onion has more than doubled since the beginning of this month causing a lot of hardship to the people , especially the poor man. While the reasons are purely seasonal, unscrupulous elements are certainly taking advantage of the situation and the government should deal with them through a host of administrative measures in sync with the state governments. The cooperative agencies must also rise to the occasion and flood the market with adequate supplies so that the prices are reined in.