Onion crisis raises a stink for India’s Prime Minister Modi

NEW DELHI (AP) — 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 large-scale protests against a new citizenship law.

Onion prices in some Indian cities have tripled to INR200 (USD2.79) per kilogramme 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 subsidised 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.

File photo shows a buyer (R) choosing onions to buy at a farmers market in Bangalore, India. PHOTO: AP

Finance Minister 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 tone deaf and 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 per cent in the July-September quarter, its slowest rate in six quarters. Retail inflation has also been rising, touching a three year high of 5.54 per cent in November. The slowdown follows several major shocks brought on by Modi’s government, including a massive demonetisation 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.

On a recent morning, in the southern India city of Bangalore, only a handful of vendors sold onions at a farmers market bustling with hundreds of people. Many vendors have given up on selling onions due to the prices, and those still selling them rue their meager profits. Shankar Burman, a construction worker who lives with 10 other people, said the rising price of onions was putting a strain on what he could buy for their joint kitchen.

Out in the countryside, farmers are also struggling.