Production decline, supply chain disruptions reason for onion, tomato price hike: Economic Survey

Commenting on the increase in the prices of onion and tomato that is troubling the Centre for the last two years, the Economic Survey, tabled in Parliament on Friday, said their prices were affected by the decline in production, partly due to extreme weather conditions and monsoon-induced supply chain disruptions. On the prices of pulses, the Survey said that despite being a major producer, the country faced a gap in demand and supply.

Economic Survey 2024-25 LIVE

“The government has undertaken several measures to rein in the prices of onion and tomato, which included procurement and buffer stocking of onion under the price stabilisation fund and subsidised sale of onion and tomato,” it noted, adding that many administrative measures have also been taken up to address the price pressures in pulses such as subsidised retail sale, stock limits and easing imports.

On the politically sensitive onion prices, the Survey found that the inflationary pressures remained firm in 2023-24 and 2024-25, despite prompt measures by the government to contain prices due to constrained supply resulting from reduced production. “Onions are grown in both Kharif and Rabi seasons, with around 70% of production occurring during the Rabi season. Fresh onions generally last about 2-3 months when stored in a cool, dry, and well-ventilated place, with their shelf life further extendable under a dehumidified environment. Thus, onions produced in one year — specifically Rabi onions harvested from March onwards are typically available for consumption in the following year, influencing inflation dynamics in that year,” the Survey reasoned. The lower production of onions in 2022-23 and 2023-24 has also led to inflationary pressures in onions.

Tomato production, the survey noted, is mainly concentrated in Madhya Pradesh, Andhra Pradesh, Karnataka, Gujarat and Odisha and this regional concentration makes the supply chain vulnerable to disruptions in any of these areas. “Similar to onions, a major portion of tomato production — more than 65% occurs in the Rabi season,” the Survey said.

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