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Onion raids, from Delhi to Calcutta

Onion hubs were raided across the country today and officials claimed prices tumbled Rs 5-10 as a result of the income-tax department’s action a day after the Centre urged states to counter hoarding.

Calcutta’s Sealdah wholesale mart and Asansol were among the places in Bengal that saw the swoops. Similar action was seen in several towns in Uttar Pradesh, Punjab, Bihar, Jharkhand, Maharashtra and Gujarat.

Finance minister Pranab Mukherjee had written to chief ministers saying they should crack down on food traders suspected of jacking up prices.

“All bottlenecks in the supply chain should be removed at the earliest so that food prices can be brought down quickly,” Mukherjee had said in his letter.

Today, some of the chief ministers launched their own measures in addition to the raids by the income-tax department, which is under Mukherjee’s ministry.

In BJP-ruled Chhattisgarh, the collectors of all 18 districts have been asked to check the prices of onions by taking action against traders suspected of hoarding.

The raids did seem to have cooled prices. Officials said the rates fell by up to Rs 7.50 to Rs 35.50 a kg at Nashik, the country’s largest onion-producing pocket.

At Delhi’s Azadpur mandi, Asia’s biggest wholesale market, the prices softened by Rs 5-10 per kg. Retail prices fell to Rs 60 a kg in Delhi and to Rs 50 in Chennai.

In Calcutta, the prices inched up marginally, though traders blamed the hardening on local factors.

The prices had increased over 23 per cent before Christmas. High onion rates have in the past dislodged state governments, a fear that may have prompted Mukherjee to order the income-tax raids.

“We know this is profiteering and we know how to deal with it,” said a revenue department official tasked with co-ordinating the drive.

Food inflation hit a year’s high of 18.32 per cent for the week ended December 25, with onions, vegetables, meat and fish accounting for much of the increase.

Some in the government predicted lower food prices by February but said the overall inflation would exceed government estimates of 5.5-6 per cent. “The current spike in food inflation should be over by February,” Planning Commission deputy chairman Montek Singh Ahluwalia told Reuters.

Officials pointed out that series of raids conducted by the Delhi government on advice from the North Block, which houses the finance ministry, had reduced onion prices in the capital in mid-December.

“We saw the raids had reduced prices from Rs 60 a kg to 45 then…we know the raids will have the same effect now too,” an official said.

But traders in Delhi admitted they had expected the action. “Those in big markets had already removed stocks and incriminating papers but these raids are spread across the country. So, smaller mandis have also been hit. That is a worry as some of the papers from there would lead to bigger players who otherwise would have revealed nothing incriminating,” said Sandeep Artiya, a trader at Azadpur.

Officials say that since exports have been banned and cold chains have sufficient stocks, there is no real reason for the prices of onions to increase so much.

Centre subsidy

The Centre today decided to compensate agriculture co-operatives such as Nafed and the National Cooperative Consumers’ Federation of India Ltd (NCCF) for up to 30 per cent of the losses they suffer by selling onion at Rs 35/kg in Delhi.

The agencies sell onions at subsidised prices at stores run by them and Kendriya Bhandar. The price will be 20 per cent less than the market price, Nafed managing director Sanjeev Chopra told PTI.