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Journalism of Courage
Why did onion prices soar 1,500 per cent though production had fallen only by 15 per cent this year? As the country debates this question, government ministries are busy name-calling and passing the buck. Documents available with The Indian Express, however, show that the absence of coordination between key government departments coupled with a lack of foresightedness were behind the worst-ever onion crisis the country has seen.
The Commerce Ministry now blames the Agriculture Ministry, the Food Ministry blames the Commerce Ministry and the National Agriculture Cooperative Marketing Federation (NAFED), and the NAFED blames them all for the spectacle that saw onions go out of the country even as people scouted for it in markets and government departments hunted abroad.
It was early in August that the Commerce Ministry first issued a warning to the Agriculture Ministry to stop the export of onions. A letter sent to Paul Joseph, Joint Secretary in the Agriculture Ministry, on August 17 says:“Considering (the) typical situation pertaining to availability of onions in the country, you are requested to consider restricting export of onion. This request may be communicated to the NAFED which is presently the sole canalising agency authorised to export onions.” The advice went unheeded.In September, the NAFED’s plea that it be allowed to import onions was also scuttled, this time by the Consumer Affairs Department (CAD) under Ministry of Food and Civil Supplies. Later that month, the NAFED applied again, but the application was not processed by the Commerce Ministry because it did not conform to the “prescribed format”.
The result was that even as the NAFED was scouting around world markets for importing onions by the middle of September, it also kept exporting them till then, before a Cabinet decision was taken to ban the export. As much as 15,000 metric tonnes (MT) of onion were exported in August and another 2,500 MT in September.
Sources close to Commerce Minister Ramakrishna Hegde — hisministry has been criticised by the NAFED for the “delay” in granting an import licence — blame the federation for the export. “If the NAFED was so concerned about the onion crisis,” they say, “it should have stopped all exports in August itself. If not on their own, then after the warning given by us.”
NAFED officials, however, deny having received any such warning, adding that communication from the Commerce Ministry, if any, would have gone to the Agriculture Ministry.
NAFED Chairman Ajeet Kumar Singh also cites the federation’s “export commitments” and its duty to ensure good prices to farmers as the reasons for continuing the exports till so late. Adds NAFED General Manager Akash Laxman: “In any case, our export during September 1998 was only 2,500 MT, 1,500 per cent less than last year’s onion export of 40,306 MT during the same period.” Total export this year is 69 per cent less than last year, he claimed.
As for the Agriculture Ministry’s role in this mess, sources close to its head,Som Pal, are quick to blame the Commerce Ministry. If the latter was so concerned, they say, it should have just cancelled the export licence, thereby suspending all exports in August itself instead of merely issuing an advisory note to the Agriculture Ministry.
On to the delay in import of onions. Commerce Ministry officials again wash their hands of, pointing out that despite being in the export-import business for years, the NAFED applied for an import licence on a plain paper on September 21. NAFED officials reportedly did not even heed a letter by the Commerce Ministry on September 24 to apply on the prescribed form.
When the NAFED submitted a revised application on September 28 for import of 100 MT onions, ministry officials say, it did so again on a plain paper. The next five days were holidays. Finally, on October 6, the Directorate General of Foreign Trade granted permission to the NAFED for imports, format notwithstanding. Two days later, the NAFED applied again for a licence, this time on theprescribed proforma to import 10,000 MT onions and was granted one the same day, sources claim.
NAFED sources now say had the Commerce Ministry done the same on September 21 itself, they could have started imports at least 15 days earlier. During the intervening period the prices in the international market soared from $230 to $350 per tonne.
NAFED Chairman Singh has also blames the CAD for refusing to grant it a counter-guarantee for imports. On September 23, the NAFED was categorically told by the CAD “not to go for imports until given a go-ahead. Anything imported otherwise will be at (the) NAFED’s own risk.”
But Food Ministry sources blame the NAFED for not “rising to the occasion”. Claims a senior ministry official: “We denied imports because we wanted to save our precious foreign exchange. The NAFED was interested in imports not because it was concerned with the onion crisis but because it would make a 5 per cent commission on every deal.”This was around the time the onion pricesreached their peak, around Rs 60 per kg. Then happened the one event which seems to have spurred all the players involved. On October 7, a meeting was held in the Prime Minister’s Office and it was decided that 10,000 MT onions would be imported, incidentally the same amount that the NAFED had sought to bring in on September 23.
On October 8, the NAFED applied for an import licence on the prescribed proforma. The Commerce Ministry issued it the same day for import of 10,000 MT. The Delhi State Civil Supplies Corporation applied for a licence to import 3,000 MT onions on October 9 and it too was granted one the same day. The CAD also gave a go-ahead on October 8, suspending its reservations on imports.
