The news comes as a shock when the GoI decided to import onion to control prices. Given the widening Current Account Deficits should we really be looking at importing as an option? Can’t the public survive without onions? The Union Minister of Finance has been asking the Indians to drop gold purchases and invest in the financial market with the aim at reducing the gold imports and thus the increase in CAD gap. They went to the extent of increasing the import duty on gold ornaments.
Unlike gold, onion scarcity in the market is not just due to increasing demands. Whenever there is a shortage on such everyday commodity, hoarding is very common which further increases the price leading to a vicious cycle. The Government should prepare itself to find and prosecute such hoarders. Most of these hoarders are not even the farmers but the middlemen. Though importing may force these hoarders to come out and sell, still an actual import would be unnecessary.
I really hope the news is just to bring out these stocks and there is no actual import.