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How onions could bring down the indian government

October 28, 2013.Onions are a staple of Indian cuisine, but at the moment not many Indians can afford them. The price of onions has more than quadrupled in the last few months and now stands at 100 rupees ($1.65) a kilo an implausibly large sum for the average shopper.

What’s worse, the hike has come in the middle of festival season, which lasts through October and November and is marked by feasts and special meals. “Every year I arrange a card party and feast for my friends and family for Diwali,” says Chinta Ghosh, a housewife in Delhi. “For almost every dish we need onions, but this year onion is out of reach. How can you have a feast without onions?”

The crisis, the government says, is due to unusually late monsoon rains and hoarding by farmers. “I ask traders involved in the black marketing of onions to stop in the interest of the people,” Delhi’s chief minister Sheila Dikshit, of the governing Congress party, told reporters on Thursday.

There is a good reason for her to be worried. The price of onions is an important economic indicator in this developing nation. A 323% jump in onion prices pushed September inflation to a 7-month high, further deepening India’s ongoing economic woes. And that, in turn, drastically worsens the political prospects of the embattled Congress party-led UPA government with polls in five key states just a few weeks away.

In 1998, the BJP government was voted out of power in Delhi when it was unable to control rising price of onions.

On the face of it, there shouldn’t be a problem. India has the world’s largest area under onion cultivation and, in terms of production volume, is only second to China, accounting for 19% of global production. However, experts say that India simply cannot keep up with a booming domestic demand that has seen a 30% increase in the past five years.

“Previously there were many places where you wouldn’t get onions and people managed without it,” Satish Bhonde, an expert in the market, told TIME. “But now its demand is in every corner of the country.”

A gap in coordination between the demand and the supply-management chain exacerbates the problem, says P. Chengal Reddy, head of the farming lobby Consortium of Indian Farmers Associations. “Every couple of years we will be kicking out governments for rising onion prices because till the mismatch continues such crises will recur.”

New Delhi is now readying to to import onions from countries like Pakistan and China, in order to meet the country’s insatiable demand. But it’s only a stopgap solution.  Until infrastructure, distribution and technology improve, and wastage is reduced, governments may find their fates depend on this pungent bulb and Indian shoppers will have plenty to cry about.
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