The decision was taken at a meeting of the Cabinet Committee on Economic Affairs (CCEA), headed by Prime Minister Narendra Modi.
The validity of the order that empowers states to impose stock limits on traders for holding onion and ban hoarding beyond the set limit expires on Thursday – July 2.
“The CCEA today (Wednesday) approved the stock holding limit order on onion by another year. This will enable state governments take effective de-hoarding measures under the Essential Commodities Act (ECA), 1955,” according to sources.
The order has been extended as onion prices in both wholesale and retail markets have started increasing due to sluggish supply of good quality onion as the crop is getting damaged in storage in major growing states.
High storage losses are likely to reduce availability of onions in the market and put pressure on prices till the arrival of new kharif crop from mid-September.
To prevent spike in onion prices in the coming days due to supply shortage, the government has already increased the minimum export price of the commodity to $425 per tonne and is also planning to import some quantities of onions to boost domestic availability.
Last year, both onions and potatoes were brought under the purview of the ECA and state governments got powers to impose upper limit for holding the stock of these two items by traders and ban hoarding beyond the set ceiling.
Other commodities that come under the ambit of stock holding limits order are pulses, edible oils, oilseeds, rice and paddy.
India’s onion production is estimated to have declined to 189.23 lakh tonnes in the 2014-15 crop year (July-June), as against 194 lakh tonnes in the previous year, as per government data.