Hands tied, knee jerk: Stock limits put on onion, potato

Written by Express news service | New Delhi | Updated: Jul 3 2014, 13:13pm hrs
CommodityStates will now be free to set their own stock holding limits, mainly for retailers, with regard to the storage of these two commodities. Reuters
The Centre on Wednesday took the extreme step of bringing onions and potatoes under the Essential Commodities Act, 1955 and letting states impose stock holding limits, following apprehensions that hoarding was causing a spurt in their retail prices. Significantly, both these commodities were under the Act from 1999 to 2004.

The move, aimed at empowering state governments to undertake de-hoarding operations and control the prices of these vegetables, was taken by the Cabinet Committee on Economic Affairs (CCEA). States will now be free to set their own stock holding limits, mainly for retailers, with regard to the storage of these two commodities.

Union Law and Telecom Minister Ravi Shankar Prasad said a notification would be issued by Thursday and would be applicable for one year. He said six states Delhi, Chhattisgarh, Madhya Pradesh, Mizoram, Tripura and West Bengal had asked the government to take this decision.

However, Congress-ruled Maharashtra, a large producer of onions, said it made little sense to hoard onions since their shelf life is just a couple of months. Onion is not gold. It cant last long, and there is no major hoarding, Chief Minister Prithviraj Chavan told The Indian Express. Stating that the state government helps farmers create storage facilities for onions, he said, This helps in stabilising prices, and blunts fluctuations.

Prasad said the decision to include these vegetables under the Essential Commodities Act only gave state governments the right to take stern action against hoarding and black marketing. We have sufficient supply. There is no need to panic. We are taking all possible measures to improve supply and control prices.

Some farmer organisations, however, said if states imposed limits, it would only aggravate the situation and lead to higher prices. Onions and potatoes cannot be stored indefinitely. They last for just three-four months, said Ajay Vir Jakhar, Chairman of Bharat Krishak Samaj, a farmers forum. A crackdown will only lengthen the gap between now and the arrival of the next crop because these vegetables would be forced to hit the market immediately.

The price rise in onions and potatoes, however, is not abnormal. A careful analysis of the trends in retail prices of vegetables shows that price rise in summer is a norm for most vegetables. The jumps are based on local factors, rather than any endemic shortage. The prices soften as Monsoon spreads across the country.

Meanwhile, the government said the decision is expected to help the efforts being taken to tackle the problem of rising prices and also improve the availability of these commodities to the general public, especially vulnerable sections.

The Essential Commodities Act was enacted to ensure easy availability of essential commodities to consumers and to protect them from exploitation by unscrupulous traders. The Act provides for the regulation and control of production, distribution and pricing of commodities which are declared as essential, for maintaining or increasing supplies or for securing their equitable distribution and availability at fair prices.