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Hyperinflation starts - food prices going up fast in India - doubling of onion prices in the past week due to a severe shortage
India is on the verge of a hyperinflation. The food prices have started doubling in a week or so! The reason is primarily escalated transportation price due to high petroleum costs. That translates into seeds of higher prices and finally that leads to gouging and hoarding. The shortage finally translates into doubling of food prices.
A doubling of onion prices in the past week due to a severe shortage made headlines Saturday in India, causing concern among politicians who fear angry consumers could again take to the streets in protest.
The onion, known as India's most "political" crop is a key ingredient in almost all everything that lands on the Indian dinner table. The rise is sharply felt in a country where more than 800 million people survive on less than US$2 a day.
"Onion Tears" read the front page headline in the Hindustan Times newspaper. "Onion prices soar, India in tears," was the headline in The Asian Age.
The sharp price rise has left politicians jittery. In the past onion shortages sparked street protests and looting _ and were blamed for bringing down two state governments.
A similar shortage in 1998 was the key issue in local elections in the New Delhi and Rajasthan regions and brought down the ruling Hindu nationalist Bharatiya Janata Party.
The current shortage was caused by devastating floods that struck the country in August, particularly in the Maharashtra State, the county's main onion growing region.
Responding to the crisis, the Maharashtra government has called for a high-level meeting of state agricultural officials.
In the capital New Delhi, onions were trading Saturday in some markets at 30 rupees (US$ 0.66; A0.55) per kilogram, double their price from the previous week. Local government figures said their was a shortfall of some 4,000 tons.
In Maharashtra, opposition politicians called for an inquest into the shortage and a ban on onion exports.
However, Agricultural Minister Shard Pawar ruled out an export ban _ a measure the government has adopted in the past.
He was also holding off on imports for now. "We have decided against importing onion from any country as it would not be economically viable," he said.
Pawar said he hoped the shortfall would only last for two more weeks until crops from other regions, unaffected by the flooding, come in.
Without any elections scheduled in the near future, Pawar was able to suggest that consumers grin and bear the price hike, the Hindustan Times quoted him as saying.
BIZ/FINANCE ARTICLES
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