Government bans export of all kind of onions with immediate effect

The government on Monday banned the export of all kinds of onion with immediate effect. The decision comes at a time the prices of onions in domestic retail markets are soaring due to a shortage of supply.

Why the ban on export?

• There seem to be two major reasons why the government imposed the ban on export.
• One in recent times there has been a steady increase in the wholesale prices of onions.
• This price surge has made onion a popular kitchen staple, costlier item in the Indian household. Secondly, the high CFPI value released by the Ministry of Statistics and Program Implementation (MoSPI).

There was a ban on exports earlier

• The government had earlier banned export of onions in September 2019.
• At that time, onion prices had increased considerably due to huge difference in demand and supply.
• Onion crop suffered major damage due to rain and floods in large onion producing states like Maharashtra.

Why the onions are costlier in the market?

• This year country received heavy rainfall in August. This has badly impacted the ready crop which was supposed to hit the Indian market this year.
• The stock also got badly affected in MP, Gujarat and parts of Maharashtra.

Will the export ban reduce the price?

• A sharp down surge in the onion price is expected once the market opens after the release of government’s notification.
• However, the marketers and traders speculated that the price may increase again within a week.
• The new crop will only arrive after November.

What is the Essential Commodities Act 1955 and what all changes have made in the act recently?

• Indian economy like every other economy works on demand and supply basis.
• Prices are apparently decided by demand and supply.
• However, in order to protect the interests of the consumer certain country law empowers the Indian government to intervene in the market.
• The Essential Commodities Act, 1955 is one of such Act which empowers the government to regulate the production, supply and distribution of essential commodities to consumers at fair prices.
• In a recent change, the Central Government made the imposition of stock limit and movement restrictions on commodities only applicable in extreme conditions like war or natural calamity.

Highest onion exports from India

• Most of the onion exports from India are to Sri Lanka, Bangladesh, Malaysia and United Arab Emirates (UAE).
• Now that onion exports have been banned, it will remove the shortage of onions in the country and its prices will fall.

UPSC