India Aims To Bring Down Inflation By Shaking Down Market Collusion

India’s top political parties are taking aim at a six-decade old practice of collusion among traders at produce markets that policy makers say helps fuel Asia’s highest inflation.

At Mumbai’s Vashi market, middleman Nitin Parakh put a towel over his hand last month as he began an onion auction. Buyers drifting through piles of onions placed bids by reaching under the towel and squeezing his hand: The thumb, middle, ring and pinkie fingers each count for 10 rupees ($0.16), while the index finger has a value of 100 rupees.

“We know secret bidding is illegal and we should actually do open auctions,” said Parakh, one of about 450 traders licensed to sell onions and potatoes at Vashi, the largest wholesale market in Mumbai, a city of about 18 million people. “This practice has been in vogue for many, many years.”

The ruling Congress party put trader rackets on its priority list after surging prices for onions — an Indian diet staple — contributed to local-election losses late last year. With a nationwide ballot looming next month, the opposition Bharatiya Janata Party also is pledging to chip away at the middleman’s margin.


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Mingze Wu

Mingze Wu

Currency Analyst at Market Pulse
Based in Singapore, Mingze Wu focuses on trading strategies and technical and fundamental analysis of major currency pairs. He has extensive trading experience across different asset classes and is well-versed in global market fundamentals. In addition to contributing articles to MarketPulseFX, Mingze centers on forex and macro-economic trends impacting the Asia Pacific region.
Mingze Wu