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Onions for Congress

July 23, 2008

ET reports

MUMBAI: Indian onion prices, muted though the agri commodities rally in the first half of 2008, have doubled in July and is set to flare in the second half on an expected drop in output, traders and officials said.

Wholesale average price in the country’s largest onion trading hub in Lasalgaon, Maharashtra, was 880 rupees per 100 kg on Tuesday, from 431 rupees on June 30. Onion, a major ingredient in Indian food, and a politically sensitive commodity, is typically cultivated thrice a year — in monsoon, winter and summer.

“Lower rainfall has delayed cultivation and it will also cut acreage in the current kharif (summer-sown) crop,” Satish Bhonde, additional director, National Horticultural Research and Development Foundation (NHRDF), told.

The kharif output in 2008/09 may fall by 41 percent to 1 million tonnes from 1.7 million tonnes a year ago, Bhonde said. Onion output in the year to March 2008 was likely to rise 11.9 per cent to a record 7.45 million tonnes, according to NHRDF estimates, which kept a lid on prices till now.

The kharif crop arrivals usually start from mid-August but cultivation has delayed by nearly two months due to scanty rains, Bhonde added. Rise in onion prices usually gives opposition parties an opportunity to put the ruling front on the mat and gather votes in India.

In 1998, the ruling Bharatiya Janta Party suffered heavy losses in a key state poll, widely blamed on high onion prices. Onion prices, a staple for most Indians, brought inflation undisguised to the poorest homes.

After, BJP led coalition to stutter in 1998 with the rising onion prices, is it the time for Congress to feel the heat?

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