India
has raised the minimum export price for onions, to maintain price levels at
home, as fears grow of a shortage because of adverse weather conditions.
Effective
immediately, exports of onions can only take place at or above the price of
$500 (£292) per tonne.
That
is a 67% jump from the government's recent pricing policy on a key ingredient
for Indian dishes.
Two
weeks ago the government had set a minimum export price of $300 per tonne.
But
at a recent meeting the government's findings showed that wholesale and retail
prices of onions have been going up.
The
inter-ministerial committee said in a statement
it reached a unanimous decision
to raise the minimum export price, keeping in view "rising retail and
wholesale prices and delayed monsoon."
Rainfall
in June, the first of the four-month monsoon season has been below average
across the country. A poor monsoon season generally stokes food inflation, in
addition to delaying the exports of some crops and increase the need for
imports.
India
has been producing, on average 18 million tonnes of onions per year. Most of
the local produce is for domestic consumption. Last year, the country exported
less than 10% of its onion harvest.
India's
new prime minister, Narendra Modi, who was sworn in just over one month ago,
had made tackling inflation his top priority after widespread resentment about
rising prices contributed to the exit of the previous government.
Mr
Modi's administration is scheduled to present its first budget next week.
Many
observers will be looking at what measures the new government will be
implementing, to tackle food inflation, manage the trade gap and create jobs
for India's youth, as it attempts to revive the economy.
Asia's
third-largest economy has been experiencing subdued growth, due largely to a
slowdown in the manufacturing sector.
The
latest figures showed an economic expansion of 4.6% in the three months to
March, which is below analysts' forecasts and at the same pace as the previous
quarter.
BBC
Business
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