India scraps onion tax as prices soar

NEW DELHI, December 22, 2010 (AFP) – The Indian government, facing mounting public anger over soaring onion costs, on Wednesday scrapped tax on imports of the vegetable to try to rein in prices of the ingredient. The government has been feeling the heat over inflation as the opposition BJP has seized on the issue to galvanise its fortunes.

The move comes after Premier Manmohan Singh expressed “deep concern” over the cost of onions doubling in a matter of days and called for steps to lower prices of what is normally one of the cheapest vegetables.

Onions are selling for 80 rupees a kilogramme (88 cents a pound) after a price surge from 35 to 40 rupees, and stories about the increase have become front-page news.

Indian authorities are mindful that onions can be a potent political issue, with voters in 1998 throwing out the Hindu nationalist Bharatiya Janata Party (BJP) in Delhi state polls after a sharp surge in onion prices.

The so-called “onion factor” also helped defeat the left-leaning, now defunct Janata Party in 1980 parliamentary elections when prices went up quickly.

The government, which is battling to curb inflation, has already banned the export of onions but has warned pric