The Onion Index

I have been thinking of an Onion  Index on the lines of the Big Mac Index.The Big Mac Index is published by The Economist as an informal way of measuring the purchasing power parity (PPP) between two currencies and provides a test of the extent to which market exchange rates result in goods costing the same in different countries. The Onion index, that would primarily be derived from Onion prices, can at once provide so many useful insights to the Indian Government:

1. an indicator of Government's popularity and approval rating

2. a lead indicator on whether the incumbent Government will be re-elected

3. an indicator of how much does the inflation pinch the common man

4. a lead monetary policy indicator on whether the benchmark interest rates will be raised

5. a lead fiscal policy indicator on whether government should come up with still more populist spending

Epilogue: My friend, Manu finds the idea of Onion Indices interesting. He says that two Onion Indices will be still more revealing - one with the farm gate onion prices and the other one with the retail (consumer) onion prices. The difference between the two (or the spread) will give us an insight into the state of our infrastructure. Brilliant idea Manu! This also ties up with our thoughts on the Infrastructure Requirement Index.