India Bans Export of all Varieties of Onion

Published: September 15, 2020

Government of India have released a notification banning the export of all varieties of onions. The ban has been imposed three months after the central government made changes in the Essential Commodities Act, 1955.

Why exports have been banned?

There could be two major reasons for imposing this ban-

  1. The wholesale price of the onion has been increased steadily.
  2. Consumer Food Price Index (CFPI) value released by the Ministry of Statistics and Program Implementation (MoSPI) for onion also stands high.

Reason for high price

Possible reasons for the inflation include,

  1. Heavy rainfall in August, this year, has impacted the ready crop badly.
  2. Stocks have also been badly affected in MP, Gujarat and parts of Maharashtra because of flood like situations and lock-down restrictions.
  3. High petrol and diesel prices and thus transportation costs have been increased.
  4. The supply chain has also been disrupted because of hoarding and so prices have increased.

What will be the impact of Export ban?

Down surge in the price of onion is expected after the notification. However, the marketers and traders are speculating that the price may increase again within a week till the new supply come in November.

Essential Commodities Act 1955

Essential Commodities Act, 1955 is the Act that empowers the government to regulate the production, supply and distribution of essential commodities so that consumers get them at fair prices. It is an act of Parliament and it was established to ensure that the timely supply and delivery of certain commodities or products so as to avoid hoarding or black-marketing.  Recently, the Government of India imposed limit on stock and restrictions on movement of commodities. The government stated that, limits and restrictions would only be eased during the extreme conditions like war or natural calamity.

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