New Delhi:
He wouldn't have expected an "onion" question at a press interaction
post the central bank's second quarter monetary policy, but when it did
come RBI Governor Raghuram Rajan was unfazed.
Soon after he announced a repo rate hike, the second in two months, in a bid to control inflation, Dr Rajan was asked how hiking rates would sort out the high onion prices issue. He responded with a wry smile, "...clearly this hike was not to quell onion prices. We have no immediate capacity to bring down onion prices."
"The Guv" had more. He went on to share his understanding of the situation on onion prices shooting up. "...clearly demand hasn't shot up suddenly to cause a sudden spurt in onion prices. There clearly is an element of supply side effects here," Dr Rajan said.
Retail prices of onions have gone up by a giddy 400 per cent in some cities over the past three months and played a part in pushing inflation based on the wholesale price index (WPI) to a seven-month high of 6.46 per cent in September. They have also caused political panic in election-bound states like Delhi, where the price of onions have influenced poll results at least once before.
In some cities, onions are being sold for over Rs. 80 per kg, compared with Rs. 20 three months ago. A couple of weeks ago prices threatened to touch 100 a kilo.
On Tuesday, average prices at the country's largest wholesale onion trading hub in Lasalgaon, Maharashtra, were Rs. 3,500 per 100 kg, nearly three times more than last year.
Soon after he announced a repo rate hike, the second in two months, in a bid to control inflation, Dr Rajan was asked how hiking rates would sort out the high onion prices issue. He responded with a wry smile, "...clearly this hike was not to quell onion prices. We have no immediate capacity to bring down onion prices."
"The Guv" had more. He went on to share his understanding of the situation on onion prices shooting up. "...clearly demand hasn't shot up suddenly to cause a sudden spurt in onion prices. There clearly is an element of supply side effects here," Dr Rajan said.
Retail prices of onions have gone up by a giddy 400 per cent in some cities over the past three months and played a part in pushing inflation based on the wholesale price index (WPI) to a seven-month high of 6.46 per cent in September. They have also caused political panic in election-bound states like Delhi, where the price of onions have influenced poll results at least once before.
In some cities, onions are being sold for over Rs. 80 per kg, compared with Rs. 20 three months ago. A couple of weeks ago prices threatened to touch 100 a kilo.
On Tuesday, average prices at the country's largest wholesale onion trading hub in Lasalgaon, Maharashtra, were Rs. 3,500 per 100 kg, nearly three times more than last year.
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