The Director General of Foreign Trade (DGFT) recently imposed a ban on onion exports until March 2024. This regulation changed the export policy of onions from ‘Free’ to ‘Prohibited.’ The current shortage in onion supply, prompted by an early depletion of 2022-23 rabi season stocks and lower kharif 2023 output along with heightened festive demand, has triggered a significant increase in onion prices.
Rationale Behind the Onion Export Ban
The government’s restriction on onion exports serves two crucial purposes.
First, it aims to control prices by preventing surges or fluctuations within the domestic market. To combat escalating prices, a minimum export price of USD 800 per tonne was imposed on onions in October 2023. Before this, in August, a 40% export duty was levied on onions. The export ban works towards stabilizing these prices, making them more affordable for local consumers.
Second, it addresses scarcity issues. Factors like adverse weather conditions, decreased production, or increased demand can lead to a shortage of onions within the country. By banning exports, the government ensures that the available supply caters to domestic demands first.
The Role of Onions in Food Security
Onions constitute a staple in Indian cuisine, and any shortage can influence food security. By suppressing exports, the government ensures that the population can access this essential food item without encountering shortages or prohibitive prices.
Understanding India’s Onion Production
Onions are horticultural commodities grown worldwide for culinary purposes and medicinal values. India ranks second globally in onion production after China, with states like Maharashtra, Karnataka, Orissa, Uttar Pradesh, Gujarat, Andhra Pradesh, and Tamil Nadu being significant producers.
Revision of Wheat Stock Limits
The government also revised the stock limit for wheat, halving it to 1,000 tonnes for wholesalers and 5 tonnes for retailers. The imposition of stricter limits discourages hoarding practices, creating a fair distribution of wheat across various stakeholders. This regulation prevents artificial scarcity, maintains food security, and ensures continued access to this staple food item for consumers.
Overview of Wheat Distribution Across India
India is the world’s second-largest producer of wheat after China. It accounts for less than 1% of the global wheat trade due to domestic requirements for subsidised food provisioning for the poor. Major wheat-producing states in India are Uttar Pradesh, Punjab, Haryana, Madhya Pradesh, Rajasthan, Bihar, and Gujarat. Major exporters of wheat in 2022-23 were Bangladesh, Indonesia, Korea Rep., United Arab Emts, and Yemen Republic.
Past Questions on Food Security in Civil Services Examination
Two relevant questions asked in previous UPSC Civil Services Examinations highlight the importance of understanding the country’s food security dynamics:
1. In 2018, aspirants were asked about the provisions made under the National Food Security Act, 2013.
2. In 2017, examinees had to evaluate the government’s efforts in addressing challenges like hunger and poverty. They were also asked to suggest improvements.
Simultaneously, an understanding of the government’s reformative measures to enhance the food grain distribution system’s efficacy was tested in the 2019 examination.