The Hindu Editorial Vocabulary– August 25, 2023; Day 458

Driven to tears: On the government’s move to arrest prices

Trade curbs (The act of restraining power, action or limiting excess) on farm products will distort (Twist and press out of shape) sowing preferences

With consumer food prices rising 11.5% in July, likely the third highest since the current retail inflation data series began in 2014, the government last Saturday made yet another gambit (A tactic or manoeuvre intended to gain an advantage) to arrest prices. A 40% export levy on onion exports was imposed with immediate effect till at least December 31. This move follows curbs on non-basmati rice shipments outside India in July, and stock limits on pulses and wheat imposed in June. Onion exports, which grew 65% last year, accounted for (Be the reason or explanation for) 8% of total domestic production. On Sunday, the government also announced a hike in buffer stocks (a large supply of a commodity (= a crop, metal, fuel, etc.) that is bought and stored when extra is available, and sold when there is not enough, in order to control its price and quantity in the economy) of the curry essential by two lakh metric tonnes. Onion traders and farmers, in the midst of (in the middle of) the first upturn (An upward movement or trend as in business activity) in prices after almost two years, were not impressed. Markets were shut in protest in Nashik, Asia’s largest onion trading hub, as farmers feared a glut (A supply or amount of something that is more than needed; an excessive amount) and a price crash.

Maharashtra and Madhya Pradesh account for almost 60% of India’s onion supplies, and the deficient rainfall this month in parts of these States after excess rains in July had put a question mark on the moisture-sensitive tuber’s prospects this kharif season. These worries likely triggered the recent uptick (A small increase) in onion prices from around ₹23 a kilo two months ago to over ₹31 by this Monday. Relative to tomatoes, the other quintessential (Representing the perfect example of a class or quality) ingredient for Indian curries, this price surge was not as stark (extreme) yet, although some analysts projected prices per kilo to touch ₹60-₹70 by September. To quell (Suppress or crush completely) onion farmers’ displeasure at the export levy imposed without a floor price, Food and Consumer Affairs Minister Piyush Goyal on Tuesday promised that onions will be purchased at a “historical high” price of ₹2,410 per quintal, and buffer stock procurements will be ramped up (Bolster or strengthen) further if needed. A Bank of Baroda report cautioned that steps such as export curbs also have a tendency to reinforce the scarcity factor worrying markets and push up prices further. How this attempt to balance the interests of consumers and farmers plays out (perform) remains to be seen. A profligate (Recklessly wasteful) use of such blunt policy interventions ends up distorting sowing preferences in the coming year, especially in the very crops that spurred (Incite or stimulate) more inflation this year. Building durable food supply chains, especially for vegetables that are traditionally susceptible to price volatility, needs greater attention so that monetary policy can focus on growth concerns. For instance, if tomato imports from Nepal helped cool their prices from triple digit levels a month ago, it makes eminent sense to engage with the neighbour for a longer-term supply plan for vegetables with some predictable purchase assurances built in.

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