Onion crisis leaves trail of tears across India

India's onion crisis

The spike in India's onion prices over the past year is proving to be highly burdensome for many of the country's 1.2 billion people, leading some to alter their traditional eating habits.

The price of onions – a staple of Indian cooking – has risen around 320 percent over the past 12 months, driven by a combination of factors including a supply shortage after excessive rains hit crop output as well as poor infrastructure for the storage and distribution of produce.

Mumbai-based Shivani Verma, who works as a chartered account, says the surge in prices has forced her to purchase smaller quantities of onions, and substitute the vegetable with other ingredients including tomato, garlic or ginger in daily cooking.

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"Previously, we used to buy 4 to 5 kilos of onions to last for a month. Now, we're buying half a kilo at a time to last for a week or two. Our consumption has reduced," said Verma, noting that onions currently cost around 75 rupees ($1.22) per kilogram in the city.

Dhiraj Singh | Bloomberg | Getty Images

To put this into perspective, in India, around one-third of the population lives on less than $1.25 a day, according to data from the World Bank.

With onions an essential part of the Indian diet, skyrocketing prices have also become a politically sensitive issue in the country, which is due to hold its general elections within the next seven months.

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"We blame this situation on the politicians. They aren't doing enough to bring down the prices," said Wilson Thomas, a personal chauffeur based in Cochin, Kerala - a state located in Southern India.

Some believe that speculation is another cause for the rapid rise in prices.

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"Farmers aren't benefiting at all. This money is going to the hands of traders and small shop owners," said Arvind Singhal, chairman of consultancy firm Technopak Advisors.

"Hundreds of millions of dollars are being taken away from consumers who are forced to pay this extra money for onions," Singhal added.

For Mukesh Gupta, a street food vendor in Mumbai, the rapid rise in onion prices is impacting his livelihood as he unable able to pass on the additional cost to his customers.

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"The rise in onion prices is eating into my profits. I cannot increase my selling price because my customers will go to other vendors," said Gupta, who uses 2 kilograms of onions a day in the preparation of his savory snacks that are priced at an average of 20 rupees ($0.30).

To keep a lid on rising prices, the Congress-led government raised the minimum export price of onions by almost 40 percent to $900 a metric ton in September. It is also looking at importing onions from neighboring Pakistan, Iran, China and Egypt.

Singhal of Technopak agrees the government hasn't done enough to control prices and believes this could backlash at the polls. "To me this is death wish by the current government. Five states will go through elections in next four weeks. Why the government is not in a state of panic completely defies explanation," he said.

—By CNBC's Ansuya Harjani; Follow her on Twitter: @Ansuya_H