Rahul Bedi: Singh knows onions could see his reign end in tears

The government of India's prime minister Manmohan Singh is under threat - and it is largely because of the price of onions.

Food inflation as a whole is putting pressure on his Administration but the soaring price of onions has largely contributed to federal and provincial governments being voted out of power.

A staple ingredient in almost all kinds of Indian food, onions were this week selling in Delhi and other northern cities at 70 rupees ($2) a kg up from 30 rupees a few weeks ago.

Enterprising traders were even offering kilos of free onions with the purchase of goods such as cars, tyres, motorcycles, televisions or other electrical and household items.

Food inflation, which hit 18.3 per cent last month, was fuelling tensions within India's Congress Party-led federal coalition, threatening to become a major issue ahead of provincial elections over the next few months in Bengal in the east and Tamil Nadu in southern India.

Facing mounting public anger over such inflated costs, Singh's government scrapped all tax on onion imports and banned their export to try to rein in prices.

Heavy unseasonal rains were officially blamed for pushing up prices, but economic analysts hold poor agricultural productivity and transportation and inadequate government investment were also responsible for the crisis.

India was also trying to persuade Pakistan to resume onion exports as food inflation was weighing heavily on the country's economy and fuelling public discontent. Last week Islamabad banned onion exports to India, fearful of shortages at home.

"We have initiated talks with Pakistan and are hopeful of finding a solution to easing pressure with regard to high onion prices" Foreign Minister S M Krishna declared.

In the perpetual tit-for-tat relations between the nuclear rivals, India has decided to hit back by declining cement exports from Pakistan, which could in turn pressure Islamabad into resuming onion sales.

The Indians are mindful that the high cost of onions could easily escalate into a major political handicap as past increases have sparked street protests and political upheaval. In 1980, Indira Gandhi exploited rising onion prices to oust the now-defunct socialist Janata Party.

She appeared at election rallies waving huge strings of onions, to the message that a government incapable of controlling their cost had no right to govern.

Nearly two decades later, in 1998, a six-fold surge in onion prices was held responsible for the electoral defeat in Delhi's state polls of the ruling Hindu nationalist Bharatiya Janata Party, the BJP.

So with food inflation rising to its highest in over a year, Congress Party leaders fear it could damage Singh's image as a globally respected economist and provide fuel for the Opposition to attack the government.

In an indication of public disenchantment with the authorities over high onion and food prices and recurring corruption scandals, a poll released last week revealed the Congress Party would lose its parliamentary majority if an election were held soon.

The Mood of the Nation poll, conducted by AC Nielsen and the weekly India Today magazine, showed that the Congress Party would drop around 40 of its current 206 seats in parliament.

- NZ Herald

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