The government has declared war on traders and wholesalers hoarding onion and we need to know why.
Onions are grown twice every year — First during Rabi season and then during Kharif season. The harvest from the Rabi season (April/May) usually lasts until the end of the year when harvest from the Kharif season hits the market (in November/December). Unfortunately, the rain gods haven’t been kind this year. Floods ravaged warehouses (stocking onions) and all the excess supply started dwindling rather quickly. And onion prices began to soar.
Readers must note that despite producing more onion than ever, our post-harvest storage facilities are still in shambles. And like clockwork, we almost always see large price hikes at the first hint of disruptions in supply.
Anyway considering all this was playing out during this year’s festive season, the government wanted to prevent a complete meltdown. It immediately froze all exports and put stocking limits in place — a diktat that prevents retailers and wholesalers from hoarding large piles of onion. This they hoped would help resuscitate supply, and bring down prices to nominal levels. Even the New York Times did a story on this. It was that bad. And once these measures took effect, prices did stabilize, albeit temporarily.
At this point, its safe to say that farmers were pretty distressed by the fact that the government was actively trying to bring down prices. Their contention was simple — “When prices hit rock bottom — say Rs.3 a kg, you don’t help us. But when prices start trending upwards, you jump in to save the city folks. How is this fair?”
In fact, many people think this is one of the reasons why there’s a supply shortage in the first place. Last year, a sudden surge in onion supply, meant farmers had to sell their produce at throwaway prices. Some were selling onions at Rs. 7–8/kg. When your return on investment can be this dismal, why plant the damned thing anyway. So many farmers refused to grow onions during the last crop season.
Long story short, with onion supplies running out, the government has tried to intervene and prevent price hikes. However, despite some temporary reprieve, prices started surging once again and hit a peak of Rs.100/kg in New Delhi last week. With options running out, the IT department is now conducting raids on traders who are suspected of hoarding onions. There’s also plans to import more onions than usual.
In summary, the government has declared a war on price hikes (onion) and now you know why.
In other news, there’s a new whistleblower letter making the rounds and a fresh set of allegations being made against Infosys CEO, Salil Parekh.
A few weeks ago, an anonymous group calling themselves ‘ethical employees’ sent a complaint to the Infosys Board of Directors and the US Securities and Exchange Commission (the people that regulate stock markets in the US) accusing the Infosys CEO and CFO of fudging financials and lying to investors about said fudging. This obviously did not go down well with anybody and the company’s share price tumbled.
And just when people were beginning to think the whole episode was behind them, another whistleblower has entered the mix.
In an unsigned and undated letter, the whistleblower, claiming to work in the company’s finance department accused CEO Salil Parekh of violating the company’s value system.
Yes... The Value System.
The letter states that even though policies require the CEO to live in Bengaluru, Parekh actually lives in Mumbai and travels to Bengaluru twice a month, charging Infosys Rs. 22 lakhs in travel expenses. So the question is — why did the board give him a free pass and why are they not demanding that he work out of Bengaluru. The whistleblower also goes on to argue that since Infosys expects its employees to bear their own travel expenses, it’s only right that the same be asked of the CEO.
I am not sure if this matter is as grave as lying about company financials. But yeah, that’s the contention here. Make of that what you will.
Now it's important to note that there have been whispers about the authenticity of these letters since the first one became public. More so, because there were large bets being made predicting a sudden crash in share price a few days before the letters were dispatched. Strange coincidence that, don't you think? And people are now beginning to speculate if all this is simply a ruse to get investors to sell Infosys stocks en masse. Is it possible that the CEO and CFO are simply being made scapegoats?
Well, we don’t know. I guess we will just have to wait for the audit committee to finish its review. Until then we hope the letters take a backseat.
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