Government on Thursday asserted the onion shortage was only "temporary" and prices are expected to fall in the next 2-3 weeks as production of the kitchen staple is unlikely to drop despite damages due to excessive rains.
"Onion shortage is a temporary situation. Heavy rains has affected crops in Karnataka and Maharashtra. Total area under the crop is higher than last year. No drop in production expected," Agriculture Minister Sharad Pawar told reporters.
Echoing similar views, Commerce Minister Anand Sharma said there is no "real" scarcity of onions in the country and prices are expected to stabilise in the coming few weeks.
Onion prices touched Rs 100 per kg on Wednesday in some major cities as supplies remained tight.
The prices are expected to come down in the next 2-3 weeks with arrival likely to increase from Maharashtra, Karnataka and Rajasthan, Pawar said here.
"Production is good. The question is when the crop will come in a big way to the markets," he said, adding the situation will improve in the coming days.
On reasons for sharp spike in retail prices, Pawar said: "In Nashik, farmers are getting Rs 45 per kg. I don't understand why it should sell at Rs 90 per kg here. Government does not control onions and does not sell onions. Prices are determined by the market."
Stating that there is no real shortage of onions, Sharma said: "I expect prices to stabilise in coming few weeks. We cannot blame exports because Minimum Export Price (MEP) has been raised and there are hardly any exports." There was crop loss due to heavy rains and this has encouraged hoarding, he added.
Meanwhile, Delhi Chief Minister Sheila Dikshit held a meeting with Pawar and Food Minister K V Thomas on the crisis.
"The situation is serious. We are trying to stabilise the prices. We will write to Election Commission to allow us to restart sale of onions through tempos (mobile vans)," she said after the meeting.
"Traders and hoarders are taking advantage of the situation. Nafed has been asked to improve supplies on a no-profit no-loss basis," Dikshit said.
Pawar expressed concern about possible glut of onions in the coming weeks leading to price crash.
"I am worried that farmers in next 1-2 months will complain about price crash," he said.
Pawar noted that exports cannot be blamed for price rise as shipments are unviable because traders are getting better price in the domestic market.
The global price of onion is about USD 500-550 a tonne, while the domestic rates are at USD 850 a tonne.
Asked on declaring onion as an essential commodity, Pawar said: "There should not be any restrictions. There should be a free market for selling onions."
Fearing that high onion prices could hurt prospects in upcoming assembly election, Delhi CM Sheila Dikshit met Pawar and Thomas in the ministry to find a quick solution to the problem. She said 8,000 quintals of onions have arrived in the national capital which could help ease prices.
"So far, prolonged rains have affected supplies. We hope next 2-3 days prices will come down. Even though crop is good, but lot of it got damaged due to prolonged and heavy rains.
We are trying our best to see prices come down. I request traders stop black marketing and hoarding," she said.
The Delhi CM informed that a team has been sent to Maharashtra to negotiate price and get onions.
"Prices in Pune have fallen to Rs 40 per kg. Maharashtra government has promised that it will supply more onions to Delhi," Dikshit said.
"We will soon amend APMC (Agriculture Produce Marketing Committee) Act. Delhi is not a producing state but a consuming and trading state. Control of prices has to be there in producing states," she added.
Yesterday, Senior agriculture ministry officials had blamed that non-amendment of the APMC act is creating monopoly in the wholesale markets.
"Onion crisis would not have blown out of proportion had Delhi and some other states amended the APMC Act by now," Sanjeev Chopra, Joint Secretary in the Agriculture Ministry, had said.
The Delhi government has not amended the APMC Act and as a result there is a "monopoly of wholesale traders", he noted.
Chopra said that there are about 1,500 wholesale traders in the national capital dealing in various agri-commodities.
"We have fixed number of wholesale traders against an infinite number of suppliers and consumers. The amendment to the APMC Act could have encouraged more players and competition," he added.
Agriculture marketing is a state subject. The Centre had finalised a model APMC bill and circulated to various States and UTs in 2003 for adoption and implementing reforms in the agri-marketing system.
So far, 16 states have amended their Acts based on the model provided by the Centre.
The model Bill includes provisions for direct marketing/ purchase of agriculture produce from farmers, contract farming and setting up of markets in private and cooperative sectors, among other things.