India's onion crisis may end in election tears for government as prices rocket

Imports sought as rocketing prices look set to cause a backlash against government at polls

PUBLISHED : Sunday, 25 August, 2013, 12:00am
UPDATED : Sunday, 25 August, 2013, 7:21am

India is set to import onions for the first time in two years as rising prices threaten to trigger a slump in support for Prime Minister Manmohan Singh before next year's elections.

Prices of the vegetable have almost quadrupled in three months in New Delhi as the government struggles to tackle the highest inflation among the biggest emerging markets.

State-run trading company PEC last week sought overseas suppliers to deliver as much as 300,000 tons of onions, while the National Agricultural Co-operative Marketing Federation of India (NAFED) said the country may buy from China, Iran, Egypt and Pakistan. Politicians have won and lost elections in India over the cost of the key ingredient used to make spicy masala.

Former Prime Minister Indira Gandhi, defeated after she suspended democracy from 1975 to 1977, swept back into power in 1980 by turning the price of onions into a populist rallying cry.

Waving garlands of onions at political gatherings, she assailed the incumbent government for its failure to control prices.

"The price of onions could become a political game-changer," said Satish Misra, an analyst at the Observer Research Foundation, a policy group based in New Delhi. "The government needs to check the prices of essential commodities, particularly onions, or it could harm its chances of winning the next elections."

Arvind Kumar Singh, who earns US$5 a day as a carpenter at a metro project in New Delhi, says the wage is too little to feed his family of five back home in Bihar. Now he can't even afford onions, a staple in Indian food.

"Everything is expensive here, not only onions," said Singh, 32, who shares a bedroom with six other men in the nation's capital. "Somehow or other, we are managing. This is not the good life that I aspire for."

In the southern city of Chennai, prices have tripled to 75 rupees (HK$9) per kg. Devaki, 40, who earns US$85 a month as a garbage collector, says her family of five was now using only two onions per meal.

They are the main source of nutrition for the poor who use them as a raw side dish with flattened bread in many northern states from Rajasthan to Bihar.

The main opposition Bharatiya Janata Party has seized on the issue and is attacking the ruling Congress party for failing to deliver an effective government.

It has opened stalls selling onions at a third of the market price and gave them out as gifts on a national holiday this week.

India is the world's second-largest producer of onions after China. Yet, it has the third-lowest yield per hectare among the 20 biggest producers.

Experts say that collusion among traders and the poor state of India's infrastructure act to push up prices.