Govt bars onion export
The steps come amid anticipated lower output of food items due to a patchy summer monsoon and drought in some states.
The Centre on Friday announced a new set of measures aimed at thwarting inflation in food articles, prohibiting the export of onion and halting the use of sugarcane juice for ethanol-making, while slapping tighter controls on wheat stocking by traders, two officials said.
The steps come amid anticipated lower output of food items, including sugar and lentils, due to a patchy summer monsoon and drought in some states.
Expecting a sharp fall in sugarcane output, the government has barred diversion of sugarcane juice towards manufacturing of ethanol, which is blended with petrol, food secretary Sanjeev Chopra said.
The decision to stop the sale of cane juice for ethanol-making will not impact India’s ambitious push to achieve 20% ethanol blending with petrol by 2025-26, a target known as E20, petroleum secretary Pankaj Jain said. “The pause is temporary and policy will be recalibrated as the situation evolves,” Jain said, adding: “We have a full plan to ensure that various competitive demands are met, including the ethanol-blending programme and Global Biofuels Alliance.”
Nearly 25% of the country’s ethanol is made from cane juice, while another 50% comes from molasses, while the rest comes from grains, such as rice and maize.
Retail inflation is expected to have rebounded in November, driven by higher food prices after declining for three months, a Reuters forecast said on Friday. The surge in prices has been led by vegetables such as onions, tomatoes and pulses, analysts said. Retail inflation was 4.87% in October, a four-month low.
The government banned overseas shipments of onion with effect from December 7 till the end of March 2024, a notification by the directorate general of foreign trade stated.
To control prices of the widely consumed vegetable, the government had imposed a minimum export price (MEP) of $800 per tonne on onion export on October 28 till December 31 this year. MEP is an export floor price designed to make a commodity expensive for global buyers. The government also removed import duties on yellow peas to boost inward shipments.
Earlier in the day, the Reserve Bank’s monetary policy committee kept the key interest rate unchanged 6.50% after cumulatively raising it by 250 basis points between May 2022 and April 2023 to support growth and keep inflationary expectations anchored. One basis point is one-hundredth of a percentage point.
Production of sugar is set to fall due to a continuing drought in Maharashtra and Karnataka, two states that produce nearly two-thirds of the country’s total output. Sugar is considered an essential item because it is widely consumed and people are sensitive to any increase in prices.
According to initial official estimates, cane production in the current year is expected to be 32 to 33 million tonnes, in contrast an output of 37 million tonnes in the previous year. Consumption demand usually stands at 26-27 million tonnes.
There will be no bar on other sources of ethanol, such as C and B-heavy mollasses, which are byproducts of sugar, as well as damaged foodgrains and maize, the official said.
“The decision has been taken so that sugar remains affordable for 1.4 billion people and we have tried to keep a balance between consumers, farmers and millers,” Chopra said.
Tightening controls further on cereal sellers, the Centre also revised quantities of wheat that can be stocked by traders at any given time to ensure more availability in markets. Wholesalers will now be able to stock no more 1000 tonnes while retailers can hold 5 tonnes at their outlets and no more than 1000 tonnes at their depots, according to fresh norms set by the food ministry.