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EJ's Blog

Ec-onion-mics

Posted by EJ on January 13, 2011 at 11:19 PM

Why blame poor onion for this chaos. In a higly inflationary India, any product or service cud have played the same role where there is no real clue about demand or supply, say railway fare, air fare, school fee, electricity charges, milk, tea, coffee, spices, clothes etc. Since onion being highly perishable and part of indian food culture, it was used as a potent weapon to get a certain lobby its cherished objective...RETAIL SECTOR FDI !!! It may create an orderly logistics, yet the base price of all the products will inch up. Rural consumption probably never got affected by high onion or tomato price as their requirement is met by local or in house produce or a substitute product. The incentive for farm sector had dropped after massive austerity package from the govt like Rs.2 per kg of rice, guaranteed employment with little to add to economy etc. It is like old communist days of Russia where a loaf of bread, milk, small housing was provided irrespective of what the citizen really produce economically thereby killing the incentive for true value addition. Now draw the same paralance in Indian farm sector. Assume the guy who gets Rs. 2 a kg of rice and some employment benefit from the state, no longers works for his own farm and goes to market to buy onion @ Rs 60...so the goverment policy had put more consumption power in hands or rural poor or just added few degrees to inflation !!!

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