Over the weekend, the government withdrew 20% of onion exports. This relieves Indian farmers, who often encounter export restrictions, just like prices rise to make them reap returns.
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These barriers are often used to enhance local supply and buffer consumer restrictions from the inflationary impact of rising prices. Since expensive onions affect the poorest people in the country, the price spikes can cause a lot of dissatisfaction given their reliance on important dietary nutrition.
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While more than 800 million people are entitled to free food, onions need to be kept cheap. But do farmers have to bear this burden? The temporary ability to curb their free sale will harm their interests.
A better balanced policy will involve onion subsidies, so the government pays for its welfare agenda. Farmers should be free to maximize their produce, even if it means shipping it to foreign markets.
Also read: Indian agriculture needs support. At least reform farm prices.
State intervention in agriculture is the cause of many troubles in the sector, which could further turmoil if policy amendments for the U.S. forces worsen. This could be a good moment to look at Indian agriculture extensively and to carry out a series of reforms that serve all citizens.
