The Indian government plans to begin releasing onions from its buffer stock starting in September to address rising prices ahead of the festive season. This intervention aims to ensure adequate onion availability during a peak consumption period that extends from Durga Puja through December, according to sources familiar with the matter.
Key Details
Onion prices have been climbing, with retail prices in some local markets exceeding ₹50 per kilogram. While the all-India average retail price remains below crisis levels, the government is concerned that higher prices could contribute to food inflation. Onions are known for their price volatility, often prompting government measures such as buffer stock releases and export restrictions when prices surge.
Background
The fresh kharif onion harvest is expected to begin arriving in markets around November, with significant supply increases anticipated in December. Until then, markets will rely heavily on stored rabi onions. To support procurement efforts, the government recently raised the procurement price for onions by 13%, from ₹1,875 per quintal to ₹2,125 per quintal. The government has set a target to procure 2 lakh tonnes of onions, with procurement currently underway.
The release of buffer stock is likely to stabilize onion prices, which could ease food inflation pressures. The onion market, a critical component of India's food supply, will be closely monitored as the festive season approaches.
Watch for updates on the kharif harvest and its impact on onion prices in the coming months.