The Hindu Business Line : Onion out of essential commodities list

IN a thanksgiving of sorts to the rural electorate of Maharashtra that paved the way for its recent assembly elections victory, the Centre on Wednesday approved deletion of onion from the purview of the Essential Commodities Act, 1955 (ECA).

The decision, taken at a meeting of the Union Cabinet here, would mean that onion would no longer be considered an `essential commodity' and neither the Centre nor the State Governments will be able to issue orders under the Act to regulate production, supply, pricing and distribution of onion.

Today's decision would also remove restrictions on movement and exports of the commodity. Export of onion is presently canalised through the National Agricultural Marketing Federation of India (Nafed) and other State/cooperative agencies, whereas from now onwards, private players would also be allowed to export on their own account.

Onion was placed under the ECA list in early-1999, following a decline in domestic production and skyrocketing of prices that led to the defeat of the then-ruling Bharatiya Janata Party (BJP) in three States. Production fell from 4.18 million tonnes (mt) in 1996-97 to 3.62 mt in 1997-98, after which it recovered to 5.33 mt in 1998-99. Since then, output has been hovering in the 4.5 mt - 4.9-mt range, except in 2002-03, when it declined again to 4.21 mt.

But the 2003-04 crop has been a bumper one of well over 5 mt, leading to a glut and piling up of huge stocks, particularly in Maharashtra, which accounts a third of the country's total onion production. "The production and availability of onion during the last five years has, by and large, been satisfactory. The price trend of onion has also not shown any abnormality during this period. The removal of unnecessary restrictions and relaxation of controls on onion will give fair returns to growers, promote consumer interest and free trade," an official release said.

The release added that onion being a perishable commodity, storage problems coupled with controls/interventions had led to distress sales by farmers at very low prices, causing them economic hardship. Moreover, no Control Order has been issued for regulating production, distribution of onion since 1999.

Following onion's deletion, the ECA's purview is now limited to 15 items, which includes foodstuffs (including edible oilseeds and oil), petroleum products, drugs, fertilisers, cotton (including yarn and textiles), raw jute (including textiles), iron & steel, coal, fertilisers and cattle fodder.

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