A few days ago, the Modi government had banned the export of onions. According to me, It was a very bad decision. This move is totally against Onion Farmers and India’s Export Market due to following reasons.
1. It would deprive farmers of the rightful price for their onion produce, and at one point they might just stop cultivating onions.
2. Our country could have earned Foreign Exchange through those exports which we won’t earn now.
But, what would have happened had the exports not been banned and government would have allowed onions to be sent abroad?
Onion Prices in our domestic markets would have shot up because of less availability of Onions for Domestic Consumption. Since Supply would have been less than Demand, the prices of onions would have increased much faster!
And we all know how much sensitive Indians are to Onion Prices. Remember how all hell broke loose in November/December last year just due to a “short term temporary rise” in Onion Prices?
Now here the Economics come in. As a rule, Government should not interfere in how the markets function. If Onion Prices rise, they should let them rise. If a person can’t afford Onions, they should consume less of it. Tell me, could government help onion farmers when prices were lowest at Rs 12/kg between 2017-2019? That’s because government can procure only limited amount of crops from farmers due to the lack of storage infrastructure and in case of surplus produce, a certain amount of crops is bound to get wasted. This is where Private players will come in and create the necessary infrastructure as per the newly amended Farmer’s bills. So if the government couldn’t help the farmers when they were getting lowest prices, then how do we expect them to help consumers when there is a temporary rise in Prices? by giving us subsidies to buy onions? I don’t think so.
Now coming to the politics part of it that wins over Economics. Every Politician knows that number of votes they will lose because of anger of Onion Farmers will be extremely less than number of votes they would lose because of so called High Onion Prices.
We are an aspiring Super Power. But the issue on the basis of which we vote is still Onion Prices. Those of you who always crib about rising Onion Prices (or any crop prices) should ask themselves today – what do they prefer? – Allowing the exports of Onions(which would help to fill the farmers’ pockets, but will cost us dearly) or not. Come on now, Show me some Hypocrisy!
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