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Government's Approach: Tackling Onion Inflation



  Aug 25, 2023

Onion Inflation: Dealing with it Government's Multi-Faceted Approach to Stabilize Onion Prices


Background:

In the last two weeks, onion prices have surged by approximately 20%, causing concern among consumers and policymakers.
 

Measures Taken:

• Heavy Export Duty: In a bid to ensure domestic availability and control the rising prices, the government has imposed a hefty 40% duty on onion exports. This duty will remain in effect up to December 31, 2023.
 
• Buffer Stock Enhancement: The government has set an ambitious onion buffer target of 5 Lakh Metric Tonnes (LMT). Of this target, about 3 LMT has already been accumulated.
 
• Procurement Increase: The Department of Consumer Affairs has issued directions to major agencies:
 
• National Cooperative Consumers’ Federation of India Limited (NCCF) and National Agricultural Cooperative Marketing Federation of India Ltd (NAFED) Both agencies have been directed to procure an additional 1 LMT of onions each.

• Strategic Disposal: To stabilize prices and ensure wide availability, the procured onion stocks will be strategically released in significant consumption centers.
 
• Subsidized Onion Sale: The NCCF will deploy mobile vans to offer onions at a subsidized rate of ₹25 per kg, starting Monday.
 
• Enhanced Retail Sale: In collaboration with various agencies and e-commerce platforms, there's a planned escalation in the retail sale of onions. This move is anticipated to boost domestic onion availability.
 
• Monitoring Price Spikes: NCCF and NAFED are specifically focusing on states and Union Territories where onion prices are considerably above the national average or have seen significant hikes in the recent past.
 

Current Status:

So far, about 1,400 MT of onions from the buffer stock have been dispatched to the targeted markets to moderate prices.
 

Future Outlook:

Despite these measures, traders predict that retail onion prices might breach the ₹50 mark by the beginning of the next month. This is mainly because the new onion harvest is due only in October, which might put additional pressure on the current stock.
 

 Conclusion:

The government's multifaceted strategy to manage onion prices showcases its commitment to protecting consumer interests. However, the real challenge will be ensuring the effective implementation of these measures and monitoring the situation closely as the new harvest season approaches.
 

NCCF

National Cooperative Consumers’ Federation of India Limited (NCCF) is an apex institution of Indian consumer cooperatives. Here's a brief overview:
 

1. Establishment:

The NCCF was established in 1965 as a response to the need for an organization at the national level to procure goods in bulk for various consumer cooperatives, in order to combat private trade and commercial interests which were seen as exploitative.
 

2. Objective:

The primary objective of the NCCF is to provide essential commodities to consumers at reasonable rates. It acts as a safeguard, ensuring that consumers are not exploited by middlemen or rising market prices.
 

3. Activities:

The NCCF is involved in various activities such as:
 
Bulk Procurement: It procures items like food grains, textiles, and other household essentials in bulk, enabling it to pass on the cost benefits to consumers.
 
Distribution: After procurement, it distributes these items to various state cooperative consumers’ federations, and other affiliated organizations.
 
Retailing: Through consumer cooperatives, NCCF often retails essential commodities directly to consumers, especially during times of price rise or shortages.
 

4. Government Collaboration:

Over the years, the NCCF has worked closely with the Indian government and has played a significant role in the Public Distribution System (PDS). It has helped in ensuring the availability of essential commodities during crises, such as natural disasters, strikes, and lockdowns.
 

5. Role in Market Stabilization:

In situations where certain commodities experience sharp price rises due to various factors, the NCCF may intervene by selling those commodities at subsidized rates to stabilize the market, as seen with commodities like onions or pulses during shortages.
 

6. Structure:

The NCCF operates as a cooperative and is affiliated with numerous state cooperative consumer federations and primary consumer cooperative societies throughout India.
 

7. Governance:

It is governed by its board of directors, which includes representatives from state federations, the Ministry of Consumer Affairs, and other relevant stakeholders.
 
In conclusion, the NCCF plays a pivotal role in the cooperative movement of India, aiming to provide consumers with essential commodities at fair prices, thereby ensuring their welfare and protection against exploitation.


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