A Stewing 'Onion Crisis' Rattles India's Governing Elite

February 15, 2007
By Amelia Gentleman
International Herald Tribune

NEW DELHI: With its capacity for bringing down governments and scarring political careers, the onion plays an explosive role in Indian politics.

This week, reports of rising onion prices have made front-page news and absorbed the attention of the governing elite.

"It's not an onion crisis yet; call it an onion problem," explained Kuldip Nayar, a veteran political commentator. "But it is beginning to sting the people."

The most vital ingredient in Indian cooking, the basic element with which all dishes begin and, normally, the cheapest vegetable available, the pink onion is an essential item in the shopping basket of families of all classes.

A popular saying holds that you will never starve because you can always afford a roti (a piece of simple, flat bread) and an onion.

But in recent weeks, the onion has started to seem an unaffordable luxury for India's poor. Over the past few days, another sharp surge in prices has begun to unsettle the influential urban middle classes.

"It's not that I can't afford them, it's just that there's not much left over for luxuries once I've bought the vegetables," said Rukmani Nayyar, 38, an office worker with the Indian telephone company, BSNL. She said that her weekly spending on basic vegetables had risen from 100 rupees to around 150 rupees, or from $2.25 to $3.40, over the course of a month.

Scowling as she contemplated onions on sale at 24 rupees a kilogram, or 2.2 pounds, piled up on a pavement stall in South Delhi's Sarojini Nagar market, she said, "Last time I remember looking, they only cost 12 rupees."

Shyam Veer, a vendor who was arranging his vegetables on a nearby stall, said: "My customers have been grumbling a lot. But they still have to buy them. Food tastes strange without onions."

The sudden spike in prices has been caused by large exports to neighboring countries and a shortage of supply. But the increase follows a trend of rising consumer prices across the board — from diesel fuel to cement, from milk to lentils.

Last week, the wholesale price index — the inflation monitor most closely watched by the central bank — hit a more than two-year high of 6.58 percent, fueled by increases in food prices, and consumer price inflation has moved above 8 percent in rural areas. Many feel the official figures understate the real rise in prices paid by shoppers in Delhi street markets. According to newspaper estimates, the market price of onions has risen from about 13 rupees a kilogram to 25 rupees in the past year. Editorials have begun to question whether the increases are symptomatic of an overheating economy.

"The routine nature of consumption of onions means that a price rise quickly transmits onto the consumer's consciousness," said C.P. Chandrashekhar, professor of economics at Jawaharlal Nehru University in New Delhi. "It symbolizes an overall feeling of inflation."

"Politicians are concerned about inflation now because it is touching the middle classes, even though large numbers have been adversely affected by rising prices for some time," he added. "Once the vocal urban middle classes are affected, it becomes an issue politicians cannot ignore. The Congress party is vulnerable."

Rising onion prices have historically been disastrous for Indian governments. In 1998, the Bharatiya Janata Party lost power in elections in Delhi and Rajasthan as the cost of the vegetable soared by 600 percent. The "onion factor" also contributed to the defeat of the left-leaning, now defunct Janata Party in 1980 general elections.

Now, the governing Congress party has gone into a frenzy of activity. The timing of the price rise is particularly sensitive, with elections this week in the northern states of Punjab, Manipur and Uttaranchal and with polls in the crucial state of Uttar Pradesh in the spring, widely seen as a dress rehearsal for the next general election.

The Congress party's success in the 2004 elections rested on its promise to share the benefits of India's booming economy with the "aam aadmi," or the common man. But it is the common man, paid by the day, with no inflation-pegged pay-rise system, who is hit hardest by the price increases. The party risks feeling the backlash.

Sheila Dikshit, the party's chief minister for Delhi, announced on Monday that onions would go on sale for "controlled prices" at government wholesale vegetable markets in the capital.

In a more general attempt to grapple with the issue, the government banned wheat exports on Wednesday, and announced its second monetary tightening measure in two weeks. Finance Minister Palaniappan Chidambaram said the inflation of "items in daily use by the common man" was "a matter of concern."

"The Congress party is very aware of the problem," said Mahesh Rangarajan, a political analyst. The government is not going to fall, but this could make or break the image built up of the party as the friend of the common man."

"With 26 percent of the population earning less than a dollar a day," he added, "and 35 percent living on less than $2 a day, price rises like these really matter."

Inside the headquarters of the opposition Bharatiya Janata Party, there is ill-disguised glee.

Volunteers have drawn up a plan to exploit maximum political benefit from the situation. This week, activists formed human chains to protest onion prices, waved banners at markets and at road intersections, and drove trucks laden with newly expensive onions (clearly marked with vast, outsized price tags) throughout the city. Posters proclaimed, "With prices soaring all around, the common man is helpless."

"Onions are what the poorest people use to add taste to their food," said Harsh Vardhan, president of the Bharatiya Janata Party's Delhi wing and architect of the onion protests. "They symbolize the poor man's diet and his ability to look after his stomach. This issue is so close to the people that they can tolerate everything else, but they cannot tolerate this.

"There is always strong resentment against the ruling regime when onion prices rise," he added.

The newsroom of the right-of-center daily Pioneer is following the price rises with avid interest.

"It's a bit silly to judge the government's performance on the basis of onion prices, but that's how it is," said Yoga Rangatia, a senior journalist who is following the onion story. She said she had stopped cooking with onions since the prices began to go up in December. "If a government cannot rein in its onion prices, then it is seen as incompetent."

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