Pakistan’s ban on onion exports ‘shocking’: Delhi

Traders say decision will cause them huge losses, government did not take them into confidence.

NEW DEHLI: Dubbing Pakistan’s decision to ban onion exports across the Wagah border as “shocking”, India on Thursday said the issue has been taken up with the authorities in Islamabad.

“It is shocking and unfortunate that Pakistan has banned onion exports to India via land route. We have urged them that the contracted quantities which were to come via the land route should be released,” Commerce and Industry Minister Anand Sharma said, reported Press Trust of India.

Pakistan on Thursday stopped 300 trucks of onions bound for India at the Wagah border, saying exports had to be curbed to control rising prices in domestic markets. However, a large quantity of onions from Pakistan will be reaching Mumbai via sea route.

Asked whether Pakistan’s action was in retaliation to India restricting cotton exports, Sharma said New Delhi’s decision was not aimed at Pakistan. The government has put a ceiling of 5.5 million bales on cotton exports for the current season.

State Trading Corporation and PEC Limited were asked to import 300 tons and 1,000 tons of onions, respectively, from Pakistan to contain prices, which had skyrocketed to 75-85 Indian rupees per kg in retail markets on December 22 and were at Rs45-70 per kg in metros.

Food inflation

India’s food inflation rose for the fifth straight week to its highest in more than a year, reinforcing fears it has spilt over to broader prices and cementing expectations of an interest rate hike in January.

But the spurt in prices of many basic foodstuffs has also raised questions over the government’s ability to control price rises through monetary policy, with poor infrastructure, hoarding and supply bottlenecks contributing to stubbornly high food inflation.

The food price index rose 18.3 per cent in the year to December 25 and the fuel price index climbed 11.6 per cent. “This number reinforces the scenario of a 50-basis-point rate hike in January,” said Hitendra Dave, Head of Global Markets HSBC India.

Published in The Express Tribune, January 7^th, 2011.