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Government Increases Onion Procurement Prices by 74% in Maharashtra Ahead of State Elections

by Tatyana Ivanovich
July 12, 2024
in News, Onion
0
Government Increases Onion Procurement Prices by 74% in Maharashtra Ahead of State Elections

The Indian government has significantly increased the procurement price of onions from Maharashtra, the country’s leading onion-growing region. According to a report by The Economic Times, the average rate has jumped from Rs 16.93 per kg in 2023 to Rs 29.5 per kg this year. This increase, facilitated through direct benefit transfer (DBT), reflects a 74% hike aimed at benefiting farmers and controlling market fluctuations ahead of the upcoming state assembly elections.

Financial Commitment and Market Impact

An official stated that the Centre plans to spend Rs 1,500 crore on onion procurement from Maharashtra in the current financial year, compared to Rs 1,200 crore allocated last year. This increase in spending is part of a broader strategy to support farmers and manage onion prices, which have been volatile due to various factors including weather conditions and market demand.

Price Surge and Export Controls

In August of the previous year, a surge in onion prices contributed to rising food costs and overall inflation throughout 2023 and early 2024. In response, the government imposed a ban on onion exports to stabilize domestic prices. While this measure helped control retail prices, it faced criticism for limiting farmers’ opportunities to benefit from high international demand.

Buffer Stocks and Market Intervention

To mitigate future price spikes, the government aims to procure 500,000 metric tonnes of onions in the fiscal year 2025, maintaining buffer stocks similar to the previous year. These buffer stocks are crucial for market intervention during periods of price volatility, ensuring a steady supply and preventing excessive price hikes.

The Indian government’s decision to increase onion procurement prices in Maharashtra by 74% reflects a commitment to supporting farmers and stabilizing the market amidst economic and political pressures. This strategic intervention is designed to protect both producers and consumers, ensuring a balanced approach to market regulation.

Tags: AgricultureDirect Benefit TransferElectionsExport ControlsFarmers SupportFood InflationGovernment PolicyMaharashtramarketMarket StabilizationOnion Procurement
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