For In­dia’s Modi, onion cri­sis raises a big stink

Orlando Sentinel - - WALL STREET REPORT -

NEW DELHI — With crops ru­ined by a com­bi­na­tion of drought and rot, the price of onions has sky­rock­eted in In­dia and added to wor­ries over food in­fla­tion at a time when the slow­ing econ­omy has be­come a li­a­bil­ity for the gov­ern­ment.

The price of onions, a sta­ple now too ex­pen­sive for most In­dian fam­i­lies, is seen by some economists as a key in­di­ca­tor of eco­nomic sta­bil­ity and op­po­si­tion par­ties have seized on the is­sue by wear­ing onion gar­lands at street ral­lies and of­fer­ing onions in­stead of gold as wed­ding gifts.

“The com­mon man doesn’t un­der­stand big­ger eco­nomic is­sues. But the onion prices will make him think twice be­fore trust­ing a gov­ern­ment,” said Karthik Gan­guly, a po­lit­i­cal an­a­lyst and a pro­fes­sor of eco­nom­ics at Delhi Univer­sity. “The soar­ing onion prices can put the gov­ern­ment in a fix.”

The onion cri­sis is pil­ing pres­sure on Prime Min­is­ter Naren­dra Modi, who is al­ready deal­ing with largescale protests against a new ci­ti­zen­ship law that has raised con­cerns about his party’s Hindu na­tion­al­ist agenda and fur­ther alien­ated the coun­try’s 200 mil­lion Mus­lims.

Onion prices in some In­dian cities have tripled to $1.25 per pound over the past month af­ter un­timely rains caused crops to fail. The gov­ern­ment has at­tempted to deal with the prob­lem by sell­ing onions at a sub­si­dized price in some states, halt­ing ex­ports and crack­ing down on hoard­ers. It also plans to im­port onions from Tur­key and Egypt, but those ship­ments won’t ar­rive un­til Jan­uary.

Fi­nance Min­is­ter Nir­mala Sithara­man an­swered ques­tions in Par­lia­ment about soar­ing onion prices by say­ing she doesn’t “eat much onion and gar­lic.”

“I come from a fam­ily that doesn’t have much to do with onions,” Sithara­man said.

The re­mark was seen by many In­di­ans as a sign that the gov­ern­ment isn’t tak­ing the is­sue se­ri­ously.

“This tells us how the gov­ern­ment thinks about the very ba­sic prob­lems faced by the com­mon peo­ple. They don’t care,” said Shalini Me­hta, a teacher.

The onion cri­sis is adding to ex­ist­ing eco­nomic con­cerns. In­dia’s econ­omy ex­panded 4.5% in the Ju­lySeptem­ber quar­ter, its slow­est rate in six quar­ters. Re­tail in­fla­tion has also been ris­ing, touch­ing a three year high of 5.54% in Novem­ber. The slow­down fol­lows sev­eral major shocks brought on by Modi’s gov­ern­ment, in­clud­ing a mas­sive de­mon­e­ti­za­tion meant to counter wide­spread tax eva­sion and cor­rup­tion and the in­tro­duc­tion of a goods and ser­vices tax.

Now onion prices are hit­ting fam­ily bud­gets and the bot­tom line of street ven­dors and small restau­rants.

“An av­er­age mid­dle-class In­dian is now think­ing twice be­fore buy­ing onions,” said Sushil Ku­mar Jain, who heads the New Delhi wing of Con­fed­er­a­tion of All In­dia Traders, a body of small traders and busi­nesses.

Mahtab Wali, a restau­rant man­ager in New Delhi, said his chefs have cut back on the amount of onion they use in dishes. “The onion,” he said, “has now be­come a rare pre­cious stone in­side our kitchen.”


An In­dian trader checks onions at a mar­ket in Ah­mad­abad. Prices have soared re­cently.

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