According to Ministry of Consumer Affairs, stored onion is not being released in to the markets and either farmers or traders are making undue profit by creating artificial scarcity
Onion prices touched Rs80 per kg in most retail markets on Wednesday despite normal supply in the wholesale markets. Food Minister KV Thomas assured state governments that the union government would find a solution to contain prices. Thomas said he was in touch with Sheila Dikshit, the Chief Minister of Delhi and authorities in other states to find an immediate solution to the crisis.
When asked about the sky rocketing prices of onion, the minister said, “I am in touch with states such as Delhi whether they are able to take onions from Nasik. (Agriculture Minister) Sharad Pawar will be coming on Sunday. So I will find some solution for it”.
Heavy rains in Maharashtra, the largest producer of onion and the Andhra Pradesh have caused extensive damage to crops that has led to its short supply in the market.
According to RP Gupta, director of National Horticultural Research and Development Foundation (NHRDF), prices of onions rose slightly to Rs46 per kg today from Rs45 a kg at Lasalgaon in Nashik, even as supplies remained normal.
He said, prices are expected to cool down in the first week of September once onion supplies from Andhra Pradesh and Karnataka increases, he added.
According to an internal note prepared by the Ministry of Consumer Affairs there was only 5% lower production of onion during 2012-13 as compared to 2011-2012 and storage was less by only 2 lakh tonnes. "But there was a sharp decline of market arrivals by around 20% to 40% during June-July 2013 as compared to 2012. It seems that the stored onion was not released to the market timely and either farmers or traders are making undue profit by creating artificial scarcity. Accordingly, prices increased almost double the level as compared to 2011-2012," the note says.
During 2012-13, the area under onion cultivation is 0.99 lakh hectares compared with 1.08 lakh hectares during 2011-12, a decline 8.33%. The figures given out in the note mention that the production of onion was 166.55 lakh tonnes during 2012-13 as compared to 175.11 lakh tonnes during 2011-12, which means that the production in 2012-13 is less than 4.89% in 2011-12.
When it comes to storage, 2012-13 saw 2 lakh tonnes less compared to 29.50 lakh tonnes in 2011-12. While, the area under onion cultivation, the production and storage have all declined marginally, the export of onions for the year 2012-13 is 5.70 lakh tonnes more compared to 2011-2012, the note said.
Onion supply to Delhi, which comes from Maharashtra, Rajasthan and Madhya Pradesh, is normal at 12,000 quintals in Azadpur, Asia’s largest wholesale market, said Onion Merchant Traders Association.
The merchants attributed the rise in wholesale price of onion in Delhi to increase in prices of the bulb crop in Maharashtra, the country’s largest onion producing state.
Puri, who resigned from Infosys, will take charge as MD of UTI AMC
Infosys Ltd said Leo Puri, has stepped down as an independent director on its board. Puri has been appointed as managing director of UTI Asset Management Co.
In a statement, NR Narayana Murthy, executive chairman of Infosys said: "We would like to congratulate Puri on his new role and wish him all the best in his future endeavours."
Brokers who have an inglorious record of dealing with stock investors are demanding money from, and action against, NSEL. However, it is not only the Exchange that is to blame, but brokers who have mis-sold the NSEL product to investors. They too are liable for legal acton by their clients
Several brokers and their associations are asking the government to take action against National Spot Exchange Ltd (NSEL), which they claim has the financial obligation for paying back to them. However, the fact is that it was brokers, who lured investors in the first place to get risk-free gains from NSEL. Thus, it is investors who should first take action against brokers for giving them the contract note of NSEL. Contract note is certainly a legal document in an exchange that was sanctioned to run by a ministry, in this case, the Ministry of Consumer Affairs.
Commodity Participants Association of India along with Association of National Exchanges Members of India and BSE Brokers Forum has also threatened that they will move court if commodities market regulator Forward Market Commission (FMC) cannot give guarantee on repayment. While that may be a valid course of action, the investors have valid grounds for suing their broker for defaulting on their obligation.
The reason is simple. Investors were offered the NSEL product with promises of high fixed returns by the brokerages. Investors primarily gave money to brokers for investment. Therefore, in the first place, it was the brokers' duty to check and verify what they were selling, which they failed in the NSEL case. Crying foul about the functioning of the Exchange is valid but can the brokers escape their role in this?
These brokers, pretending as if they do not know anything about NSEL operations, are now expressing concerns over quantity and quality of commodities lying in warehouses controlled by NSEL. Brokers are claiming it was NSEL’s responsibility to verify stocks. Brokers have even demanded that the government should take over Financial Technologies India Ltd (FT) the promoters of NSEL as well until the mess is cleaned up.
Kirit Somaiya-led Investors’ Grievances Forum (IGF) went further. IGF has filed a complaint with the economic offences wing (EoW) of the Mumbai Police against NSEL. The Forum while demanding police to file first information report (FIR), accused NSEL of cheating, fraud, forgery with the victims being 17,000 small farmers and investors. In all fairness, IGL should add brokers to the list of those who have sold a dubious product to investors.
Interestingly, a circular from NSEL says, “Giving / taking delivery of commodities in ‘demat mode’ should be directly to / from the ‘beneficiary accounts’ of the Clients except delivery of commodities to a recognised entity under the approved scheme of the Exchange.” Did the brokers ensure this, clients can ask.
The NSEL circular also says, “Member of the Exchange shall make the Client aware of…the precise nature of business to be conducted, the risk associated with business in trading in contracts permitted in the exchange for Spot Trading, including any limitations on that liability and the capacity in which the Member of the Exchange acts and the Client’s liability thereon.” Was this done by brokers? Most certainly not.
The NSEL circular also says, “The Exchange Member shall not furnish any false or misleading information or advice with a view to inducing the Client to do business in particular contract or contracts and which shall enable the Exchange Member to profit thereby.” Making presentations to clients, which gives the impression that NSEL contracts offer a high fixed return while the funds are secured against goods, is clearly a violation of members’ responsibilities, in the eyes of investors.
The brokers who are leading the charge do not exactly have a shining record of treating their customers fairly in the stock market. From forging Power of Attorney frauds to unauthorized trading, to illegal selling of shares, they have indulged in multiple misdemeanors. All of them have got away too, thanks to a grievance-handling system of the exchanges and the market regulator that is loaded against investors.