In the wake of falling onion prices, the government on Thursday lifted the ban on export of onions.

The decision to this effect was taken by an empowered group of ministers on food headed by finance minister Pranab Mukherjee. 

The government had banned the export of onions in the last week of December when prices had soared to Rs 80 per kg.

The ministers' panel, as a precautionary measure against possibility of price shooting again, decided to allow shipments of onions at a minimum export price of $600 (about Rs 28,000) per tonne, a senior government official said.

To dissuade onion exports, the government had raised the MEP from the previous level of $525 per tonne to $1,200 per tonne. Later the exports were completely banned.

Prior to the ban, India exported 11.58 lakh tonnes of onions mainly to gulf countries, Sri Lanka and Malaysia during April-November of this fiscal.

The prices of the kitchen staple have crashed to Rs 4-12 per kg in the wholesale markets of Nashik, the main onion growing area, which led to agitation by farmers who demanded lifting of ban on its exports.

The decision came just days after agriculture minister Sharad Pawar and Maharashtra chief minister Prithviraj Chavan approached commerce minister Anand Sharma to lift the ban on onion exports following the farmers' stir in Nashik against crashing prices.

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Finance Minister Pranab Mukherjee expressed optimism of food inflation coming down to single digit as the rate of price rise of essential kitchen items moderated to 11.05% in the first week of February.

"In some time food inflation will also be under single digit," Mukherjee told reporters here.

Driven by high vegetable prices, food inflation has been in double digits for the past two months and even crossed 18 percent in the last week of December.

"Now it is going down and I think WPI (wholesale price index) has also come down by 2 percentage points. So it is good sign," Mukherjee added.

Food inflation for the week ended February 5 touched a nine-week low at 11.05 percent, down from 13.07 percent in the previous week.

Planning Commission Deputy Chairman Montek Singh Ahluwalia also today forecast continuation of the declining trend.

"I am glad that (food) inflation has come down and I do expect that (the decline) would actually continue," Ahluwalia told reporters here.