Onion export ban, wheat curbs to keep food prices in check

The government has banned exports of onion and imposed additional limits on stocking of wheat, as it seeks to augment availability of these key staples and check rising food prices ahead of next year's general election.

- Puja Das

Onions, a politically triggering vegetable when expensive, have been placed under the ‘prohibited’ category with immediate effect and until March, the Directorate General of Foreign Trade said in a notification amending its export policy.

As for wheat, the government has significantly lowered stock holding limits for wholesalers, retailers and processors with immediate effect. “This has been done to prevent artificial scarcity and curb hoarding," food secretary Sanjeev Chopra said at a press briefing.

Onion prices were up 58% in November both because of festive demand and lower output during the monsoon sowing, or kharif, season following erratic rainfall and extended dry spells. Wheat prices were at an eight-month high in October owing to festive demand and limited supplies.

Barclays recently estimated that India’s retail, or consumer price index (CPI)-based, inflation may have risen above the Reserve Bank of India’s tolerance limit of 6% in November, from 4.87% in the preceding month, driven primarily by higher food prices.