MUMBAI: The aroma of frying onions from the Britannia and Co. restaurant might not penetrate the office of India’s central bank governor Raghuram Rajan a block away, but like the eatery’s customers, he can’t escape the soaring price of the pungent vegetable.
The price of onions has added to Rajan’s already full plate as the new head of the Reserve Bank of India (RBI) wrestles over how to help stabilise the rupee currency and tackle inflation without further dampening economic growth.
A former IMF chief economist, Rajan took over at the RBI on September 4 in the middle of India’s worst economic crisis in 20 years. He will announce his first monetary policy review today.
The US Federal Reserve’s surprise decision on Wednesday not to wind down its massive monetary stimulus just yet helped the rupee to a one-month high yesterday, so inflation may have now moved up on his list of priorities.
In August, the cost of onions was 245 percent higher than a year earlier, while other vegetables shot up 77 percent, driving headline inflation to a six-month high. Onion prices have risen even further in September, prompting the government to take steps to limit exports.
Eaten raw as a side dish, or blended into a vast array of curries, onions play a prominent role in Indian cuisine and public anger rises quickly whenever prices spike.
In Britannia, the pinch is being felt by customers who include employees of the Reserve Bank, who drop by to lunch on steaming plates of its famous Parsi berry pulav rice.
Erratic prices for perishable goods are routine in India, partly because the majority of farms depend on the variable monsoon for rains. This year, a drought followed by too-heavy rain affected supplies. REUTERS
