Onion crisis brings tears to eyes of Indian PM

If he thought all his Christmas’s were going to come at once, Indian PM Manmohan Singh was sadly mistaken - he can now add the skyrocketing price of onions to his list of woes. In recent days, the price of onions has more than doubled in India’s vegetable markets from Rs35 per kilo to R80s, angering consumers who have already had to put up with a year of double-digit food price inflation. Mr Singh is already on the case, calling for urgent measures to counter the crisis, and he has good reason to be panicked too: the price of onions can be a potent political issue…

Onions are a staple ingredient of Indian cooking, especially in the north of the country. The crop has been severely affected by unseasonably heavy rain in western regions, and the yield in one area alone was thought to be down by around 16%. The problem is likely to have been exacerbated further by wheeler-dealer traders upping prices to cash in on the shortage.

It appears for now that the Government is doing its best to cool prices, with Mr Singh today slashing import duties for the root vegetable, after having banned onion exports last week. It is already thought to have been buying back onions it recently exported to neighbouring Pakistan – no doubt at an elevated price. That’s got to sting a little.

It’s little surprise that Mr Singh and his government is in a hurry to fix things – a dramatic rise in the price of onions in 1998 is credited with determining the outcome of an election in Delhi, where the Hindu nationalist Bharatiya Janata Party (BJP) were ousted.

What’s more, it comes at an already-dicey time for the Congress-led administration, which found itself in hot water after it was discovered that mobile phone licences were sold for a fraction of their value, costing the government up to $39bn in lost revenue. Earlier this week, 20,000 members of the BJP held a rally in protest against the alleged corruption, and more are planned in the forthcoming weeks.

And even if the spike in onion prices doesn’t last, it may not be the end of Mr Singh’s agricultural angst, as predictions of further food price hikes due to this year’s late rains, continue to, er, reign. Plenty more tears to come then…