Pune:
A powerful traders' cartel working Asia's biggest wholesale market at Lasalgaon town in Maharashtra is believed to be a key factor behind the staggering rise in onion prices.
NDTV's investigation into the fluctuating onion prices at Lasalgaon in Nasik revealed that onion prices shot up due to a drop in supply, and peaked when markets were suddenly flooded with onion stocks in August and October.
Documents accessed from the Maharashtra Agriculture Department show that in August, when the supply dropped by almost half to about one lakh quintal (1 crore kg), a sharp spike in prices looked like the inevitable next step.
Yet no measures were taken by the government to beef up the stocks.
On August 1, the average rate of onions at the Lasalgaon market was a little over Rs 24 a kg.
But the continuing shortfall of onions had a cascading effect in several markets and the demand rose sharply, pushing up prices.
Days later, on August 12, the Lasalgaon market was suddenly flooded with 25,000 quintals or 25 lakh kg of onion. Sources say the traders had booked this stock from farmers and pumped them back into the market when the prices were rising.
Contrary to the market principles of greater supply bringing down rates, the onions sold for up to Rs 47 a kg - an almost 100 percent rise within a week.
In October, the supply at Lasalgaon market against jumped dramatically. But again, defying market norms, the prices kept soaring.
Sources say a cartel of influential traders played a vital role in deciding how much onion to release into the market to extract the highest price. These traders allegedly draw their clout from political connections.
"The Congress and the NCP who run the government in Maharashtra won't act against their own who hold various posts at the Agriculture Produce Market Committee,'' said an agricultural expert, alleging that the cartel is linked with the ruling combine.
On Thursday, Agriculture Minister Sharad Pawar of the NCP said the prices would cool down in a couple of weeks and the government was taking steps to ensure that retail prices stayed within Rs 45 a kilo.