Blaming traders for creating artificial scarcity, the government said it will restrict onion exports till prices stabilise. An immediate ban was, however, ruled out.
Onion prices in major cities touched Rs 90 today even though wholesale rates were much less at Rs 50-60 a kg. The previous record high of Rs 85 per kg was in 2010.
The kitchen staple costs up to Rs 68 per kg at 500 Mother Dairy outlets in the national capital region, while in Mumbai the prices are between Rs 70-80 a kg. In some pockets in Delhi, price is as high as Rs 90 per kg.
Reports from Chandigarh and Patna said local vendors were selling onion at Rs 80-90 per kg.
Concerned over price spike, the Centre asked states to take firm action against hoarders to boost domestic supplies as prices have been high for the last three months.
After discussing the issue with Agriculture Minister Sharad Pawar, Food Minister K V Thomas said there is no plan to ban onion exports. A senior government official, however, said that the Centre is also considering banning overseas shipments, which has fallen sharply after the imposition of minimum export price (MEP) on August 14.
"We have enough onion stock in the country. The state governments must act firmly against hoarders who are hoarding onions which has led to the artificial scarcity and sharp escalation of prices," Commerce Minister Anand Sharma said.
"We will import onions if it is required or if there is a proposal to stabilise the crisis," Sharma said.
Thomas said: "We are also looking at importing on an urgent basis onions from Egypt, China and Pakistan. Pawar has already instructed Nafed to look into possibility of imports".
He also attributed the price hike to unseasonal rain in key producing states like Maharashtra, Gujarat and Rajasthan.
"I discussed the issue of onion with Agriculture Minister. What I gather is that kharif crop, which should have come by first week of October, could not arrive to markets because of unseasonal rains," Thomas later told PTI.
When asked whether government will ban exports, the Food Minister said: "We have already increased MEP. If you ban, it will be good politically, but not economically because no country will trust us."
On the sidelines of a CII conference in Mumbai, Thomas said: "Traders are taking undue advantage of shortage...but we don't have any plan to abruptly ban exports. The government this time has a stable policy. Instead of putting a blanket ban, we are putting curbs to control export."
"As per the Agriculture Ministry, production of onion is good, though some damage has happened due to untimely rain. There is stock with farmers and traders. We have requested states especially Maharashtra, Rajasthan and Gujarat to send supplies to Delhi and other consuming states on priority basis to check price rise," Thomas said.
Meanwhile, Sharma in New Delhi said: "Inflation is a matter of serious concern, but it is driven by vegetable and food. We hope it is temporary, seasonal and will settle down."
Private traders had imported 1,800 tonne of onions in September from Egypt, China, Iran and Afghanistan to augment domestic availability.
The imports appears to have had no impact as prices have again shot up to Rs 80-90 level in major cities.
The government had taken several measures to check price rises but to no avail. It had slapped in August a minimum export price of of USD 650 per tonne, which was later hiked to USD 900/tonne in September.
Onion exports have falling by 28 per cent to 7,16,246 tonnes in the first six months of the current fiscal compared to the same in the previous year. India produced 16.3 million tonnes of onion last year.