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The Curious Case Of Onion Prices And Bihar Elections

Rithika Kumar,
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Vegetable stand. Mumbai, India


Onion prices and the stock markets have recently been in the news but for contrary reasons—one is rising precipitously while the other is falling rapidly.


Recently, after the Indian stock markets plummeted by over a thousand points, there was a joke doing the rounds on social media that showed a picture of a housewife threatening to hit her husband who had not heeded her advice of investing in onions and invested in stock markets instead.


Data from the National Horticultural Board shows that onions are among the most consumed vegetables, especially by the poor. Annual domestic onion consumption is around 15 million tonnes and so, it’s not difficult to see where this joke is coming from.


The price of onions, staple in most Indian households, has increased from Rs 1,325 per quintal (national average) in January to over Rs 3,300 per quintal today. This translates to a greater than 150% increase over the last few months, with expectations of a further rise in prices.


There have been many explanations for this price rise–deficit monsoons that have affected the late kharif crop, unseasonal rainfall that damaged the winter harvest and impacted supply etc. However, this Mint article that says onion production was neither unusually low this year nor was there anything abnormal with the quality of produce, draws our attention to collusion among onion traders as a possible explanation for this surge in onion prices.


But there seems a whole other curious coincidence to rising onion prices–they seem to match every Bihar election cycle. India is a country where an election is held every year – general or state or both. A cursory glance at the data revealed evident peaks in the price of onions over the last decade. Bihar, which is the 4th largest consumer of onion in India, is now gearing up for elections in September. So, we examined wholesale prices of onions in Patna from 2004 onwards.


In 2005, over the six-month period preceding the Bihar assembly election in October, the national average onion price rose by almost 240% to Rs 1,060/quintal. Similarly, there was an over 155% increase in price in that same six-month window in 2010.


In the current run up to the Bihar assembly elections, what we are seeing is an astounding co-incidence of a rise in nodal onion prices in the Patna wholesale market six months before the election.  Earlier this year, the price of onions stood at Rs 1,488/ quintal. Today, six months later, there has been an over 142% increase to Rs 3,603/quintal in Patna with a major proportion of that increase occurring over the last two months with expectations of a further price rise in the next two months.


Source: National Horticulture Board


Probing further we observed similar trends in 2005 and 2010 before the Bihar assembly elections that were held in October in both years. In both years, nodal wholesale onion prices at Patna steadily rose over the six months leading up to the elections, by 230% and 177% in 2005 and 2010 respectively.



Source: National Horticulture Board


While prices have risen at other times too and this is merely an observation and not a rigorous analysis to prove or disprove any hypothesis, a 100% correlation between the Bihar election and rising onion prices is intriguing.


If we accept the argument that onion prices are more a function of hoarding and market manipulation practices as the Mint article argues, then rising onion prices during election cycles is indeed the curious case of “Onionised Elections”.


(Rithika Kumar is an Analyst at IDFC Institute. Additional inputs from Praveen Chakravarty, Visiting Fellow at IDFC Institute.)


(This story is part of IndiaSpend’s special analyses of Bihar. You can read the other stories of this series here.)




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  1. Vinay Tandon Reply

    August 31, 2015 at 11:50 am

    But did the onion prices fall and by how much after each of these election?

  2. Anirudh Tagat Reply

    August 31, 2015 at 5:20 pm

    First, the contention that we are seeing a 100% correlation can only be proven if there was a corresponding decline in Onion prices for the preceding (or following) six-month period. Without this data, we are only able to conclude a 100% correlation because this is what we are set to prove!

    Second, it might be more useful to use state-wide APMC data (averaged) for the analyses, since we expect state-wide elections to affect all prices, and not just of the capital city.

    Next, if Bihar is not the major producer of onions in India, and yet faces the curious case of onionised elections, then perhaps we have some reason to believe that the same would be the case in larger producers of Onions.

    So I went out and looked at the data, and incorporated these two elements as a counterpoint to your article, and found that for the 2009 assembly elections in MH, there was a similar effect (but it goes away after the elections, so your theory may stand), but in the more recent 2014 elections, this does not seem to be the case. It seems as though onion prices did not vary consistently over the 8-month time frame leading up and immediately after the elections (I chose the period of May-December).

    You can find the results from my analysis here: https://dl.dropboxusercontent.com/u/44315256/MH_Onion_Elections.pdf

    And you can find the data I used here: https://dl.dropboxusercontent.com/u/44315256/MH_onion_elections.xlsx

    Useful hunch, but the analysis could be a lot more rigorous :)

  3. RK Reply

    September 1, 2015 at 4:27 pm

    yes your points well taken and as the article clearly says – “While prices have risen at other times too and this is merely an observation and not a rigorous analysis to prove or disprove any hypothesis, a 100% correlation between the Bihar election and rising onion prices is intriguing.

  4. Anirudh Tagat Reply

    September 5, 2015 at 7:11 am

    Point well taken, I can see that you feel it would outside the scope of the article, but the 100% correlation can only be claimed to be intriguing if is true. For this you need to have a full dataset and not just the six months preceding the elections.

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