Govt plans to make onion transport by railways the norm to moderate prices

New Delhi: The ministry of consumer affairs, food and public distribution plans to make railways the standard method of transporting onions to moderate their retail prices, two people aware of the matter said.

This follows delays in truck transportation, which has been unable to offer a solution, with retail prices still at high levels. In addition to deploying rail rakes to ensure timely supplies, the ministry will train staff to load onions and update inventory data on the government portal, one person said.

“Loading stock into rail wagons is a Herculean task. The staff must record every batch taken from the warehouse and loaded into the wagons to ensure accurate information on the quantity of stock being transported,” this person said.

Although rail rakes loaded with onions have been reaching the wholesale markets of the National Capital Region since 20 October, the kitchen staple still sells at ₹57- ₹70 per kg due to limited supply.

Mint reported on 27 September that the government planned to move onion stocks by rail instead of road to reach the markets faster.

Also Read | Government to rope in Railways to rein in sky-high onion prices

“The transport of onions through rail has yielded positive results. Although it was implemented late, it has significantly reduced prices in Delhi and the NCR. As of 29 October, the average retail price of onions in Delhi was ₹57 per kg compared to ₹80 per kg last year,” the second person said. “With intervention at the wholesale level, prices have reduced by 29%. Had this measure been implemented a bit earlier, the average prices might not have crossed ₹50 per kg.”

“Given that this was the first time railway services were utilised for market intervention, we are working on resolving challenges associated with loading onions,” the second person said.

Curbing inflation

Onion prices typically rise in August and continue to increase until the arrival of kharif onions, which usually starts in November. The bulk market intervention is aimed at checking high profiteering practices by traders.

Comparatively, onions are currently sold at ₹63 per kg in Mumbai, up from ₹50 per kg a year ago. In Chennai, the price has risen to ₹67 per kg from ₹60 per kg, and in Ranchi, onions are available at ₹58 per kg, compared to ₹50 per kg a year ago, according to data from the Department of Consumer Affairs.

Also Read | Amid price hike, centre offloads onions from reserves to stabilize market, plans subsidized sales at ₹35/kg

Onions are being sold at ₹69 per kg on online retail platforms, including Amazon Fresh and Tata’s BigBasket. The government is selling onions at a subsidised rate of ₹35 per kg through mobile vans in major consumption hubs.

Queries sent to the ministry of consumer affairs, food and public distribution remained unanswered till publication time.

“This move by the government may help control food inflation, but it is essential for the government to consider the needs of farmers and domestic markets as well,” said Ramesh Chandra Lahoti, president of the Federation of Karnataka Chambers of Commerce and Industry. “Decisions should not prioritise small political gains at the expense of farmers and the market." 

The price of this politically sensitive food item began rising after the government’s decision to scrap the minimum export price of $550 per tonne on 13 September and halve the 40% export duty imposed on onion shipments.

Also Read | Govt removes minimum export price for onions and basmati rice

Traditionally, onions are transported by trucks, each with a carrying capacity of 25 tonnes. In contrast, trains with 42 wagons can carry as much as 1,700 tonnes.

The major onion-producing states are Maharashtra, Karnataka, Madhya Pradesh, Gujarat, Bihar, Andhra Pradesh and Rajasthan.

Onions, tomatoes and potatoes are key contributors to food inflation. Food prices at the retail level rose 9.24% annually in September, pushing retail and wholesale inflation up.