The great 'Onion' paradox

The way that onion prices have been soaring up in recent times, the vegetable has become the subject of numerous jokes. But it has also brought tears into the eyes of the common man who is already reeling under the pressure of high inflation. In fact onion has been a main cause for higher food inflation. This has become a worrisome factor for everybody including the government. Given the strong public reaction to high onion prices, state governments are now scrambling to come up with measure to curb the same. But they seem to be completely ineffective as they are still not addressing the root of the problem.

As per The Mint, the increase in onion prices has little to do with the seasonality factor. It is more of a structural issue. You see in Maharashtra, the largest onion producer of the country, prices are controlled by the traders. These traders have typically formed a cartel and this ensures that prices of the commodity remain under their control. These cartels have been able to exert considerable political influence to ensure that their interests remain protected. They ensure the absence of genuine competition in the markets. In addition the transaction charges by the cartel's middlemen have led prices to remain high. What the government needs to do is to free up the commodity markets all over the country to ensure healthy competition. This would do away the need of the middleman which would help the prices stabilise in the long term.