Ban lifted on Onion Exports

Recently, the Government of India lifted the ban on export of all types of onions. The ban was imposed by the central government in September, 2020 and is to be lifted from January 1, 2021.

Why did GoI impose ban on Onions?

There were two major reasons behind the government ban. Wholesale prices of onions have steadily increased in the last few days. Since onion is a daily consumption item, its price increase directly affected the people. Another reason is the high CFPI value released by the Ministry of Statistics and Program Implementation (MoSPI). CFPI is Consumer Price Index Numbers.

Why did the prices of Onions increase?

This year the country received heavy rainfall in August. This has badly affected the fully grown onion crops that were ready for harvest. This hit the Indian market badly. Stocks were also badly affected in parts of Madhya Pradesh, Gujarat and Maharashtra due to rains.

Another main reason for the price rise of onions is that it was removed from the Essential Commodities list under the Essential Commodities Act. This means that there was no stock limit on onions and also on production and distribution of onions.

Onion-Not an Essential Commodity

In September 2020, the Essential Commodities (Amendment) Bill 2020 was passed. According to the bill, the food items such as rice, onions will no longer be qualified as essential commodities. With this, there is complete freedom to produce, distribute and supply agricultural products. This was done to bring in direct investment in the agricultural sector.

What is Essential Commodities Act 1955?

The Indian economy functions like any other economy on the basis of demand and supply. Prices are clearly determined by demand and supply. However, certain laws give the Indian government the right to intervene in the market to protect the interests of the consumer. The Essential Commodities Act, 1955 is one such Acts, which empowers the government to regulate the production, supply and distribution of essential commodities to consumers at reasonable prices. In the recent change, the central government has banned the limit and movement of stock of commodities in extreme situations like war or natural disaster.

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