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Onion Price Hike: In view of rising onion prices and the upcoming festive season, the central government has taken a major decision. Instead of releasing its entire onion buffer stock into wholesale markets, the government will supply it directly to consumers through retail outlets. This decision stems from lower procurement volumes and the limited size of the buffer stock.

**Buffer Stock Shortfall and Procurement Challenges**
The central government had set a target of procuring 2 lakh tonnes of onions for the buffer stock this season. However, due to various practical and technical hurdles, only about 1.2 lakh tonnes could be procured. Farmers were reluctant to sell to government agencies because market prices were high, forcing the government to raise the procurement price six times. Additionally, operational challenges faced by procurement and storage agencies slowed down the process. Consequently, after accounting for spoilage and storage losses, only about one lakh tonnes of onions are estimated to be available for release into the market.

**When Will Sales Begin and What Is the Plan?**
According to senior officials, the plan is to commence the sale of the buffer stock in late August or early September. Approximately 800 tonnes of onions will be sold daily, with subsidized sales likely continuing for about 125 days. Sales will be conducted in major consuming cities such as Delhi-NCR, Mumbai, Ahmedabad, Chennai, Kolkata, and Guwahati through retail outlets and mobile vans operated by NAFED and NCCF.

**Onion Inflation Rate Hits 22.5% in July**
In July of the current fiscal year, the retail inflation rate for onions rose to 22.5%, up from just 4.7% in June. However, despite concerns regarding delayed Kharif sowing and anticipated lower production, the average retail price of onions currently remains stable at around ₹50 per kilogram. The government estimates that this 125-day retail sales initiative will help keep prices under control until the arrival of the new Kharif crop begins at the end of September.

Government move could ease inflation
According to Madan Sabnavis, Chief Economist at Bank of Baroda, the biggest challenge in onion management lies in safe storage and releasing the stock into the market at the right time. Selling onions directly in the retail market has an immediate impact on retail prices, providing consumers with direct and quick relief from inflation.

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