The Central Government Elicits Stock Limit On Onions


The central government put a stock limit on onions a swell. The business market of the nation is facing fluctuations in terms of the price rise and demand-supply balance. Ever since the pandemic hit, the essential commodities have suffered a great deal of imbalance. The general public has sought to buy the daily commodities from the street vendors at prices way higher than the market price and each vendor selling the vegetables, etc. at their own price. This created a lot of fluctuation in the business environment. To balance the internal factors, the Central government elicits a stock limit for onions. Onions are a staple food for most Indians. Thus, onions price rise impacts the national cycle to a great extent. This decision will ensure that the stock limit will balance the demand-supply equilibrium. Furthermore, the retailers will sort to selling at the market price.

The central government elictied a stock limit on onoins
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The central government amended the Essential Commodities Act


The Essential Commodities Act of 1955 has several provisions as far as the wholesalers and retailers are concerned. The stock limit in the Act has been amended. As per the latest records, retailers can only hold onion stock of up to two tonnes. On the other hand, wholesalers can hold 25 tonnes of onions with them. This decision will reach its implementation in December 2020. According to the Essential Commodities Act, the central government can only amend the Act in case of emergencies. These include drought, floods, natural calamity, or an extraordinary increase in the prices. In the case of onions, the Act says that the amendment can happen if a 100 percent rise in retail prices over the past 12 months or the average price of the last five years, whichever is lower.

We know that the onion prices in India have spiked to a great extent. In Chennai, these have jumped by 107 percent in October 2020, and in Mumbai and Kolkata, these have increased by 40 percent. The exports of onions have also increased this year, due to which the internal demand has been fulfilled at a higher price. The prices are higher than Rs. 75 per kg in most parts of the nation.

The central government elictied a stock limit on onoins

Official statements from the Center


Consumer Affairs secretary Leena Nandan said that this amendment will help in the regulation of essential commodities even in the extraordinary price hike condition.

The central government has also invoked a ban on the onions’ exports for the time being. This is due to the price exploitation as explained earlier. Nandan further added, “After today’s decision, no one can hoard the onions and manipulate the prices.”

This year’s late harvest has also played a major role in the price hike. Usually, around this time, the production in the Kharif season is around 4.3 million tonnes. However, this year, it amounts to around 3.7 million tonnes. The shortage of onions has caused the price hike. So, the central government hopes to reduce it with the new amendment in the Essential Commodities Act.


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