I own the same book and was similarly surprised when I read that instruction, but in the section on ingredients, the author does mention a particular variety of onions called pink onions. The mention is on pg. 32, and there is a picture of a pink onion on the upper left of pg. 34.
Here's an excerpt from pg. 32:
"The longer the onions are fried, the browner they will get and the deeper the color of the curry will be... When the onions are fried until only light pink in color, they will impart a sweetish taste to the curry. Certain varieties of onion, like Spanish onions, are too sweet to be appropriate for curry-making. The most appropriate from the taste point of view are the French and the small pink English."
From 50 great curries of india
I've never seen pink onions in any of the local markets (in northwestern US), I used white onions and sauteed them just to the point of browning. The recipe turned out fine, but it's a lot of onion. (The recipe calls for 2 large onions, finely chopped. It's a recipe that produces 2 servings.) Personally, I'd go a little lighter on the amount of onion or use yellow onions (despite the author's recommendation against Spanish onions), but that is just personal preference from a Western palate.
Note: it looks like the current printing of the book is different from the one I own, so the page numbers I cite may be off, but if you search inside the book (on Amazon) for "pink onion" you can see the page I've cited and the picture of what the author calls a pink onion.
Best Answer
Golden goodness of ghee has a special value in the culture and cuisine of Indian sub-continent since ancient times. Ayurveda suggests it promotes digestion and increase the absorption of nutrients.
Adding warm ghee to any meal enhances the taste significantly. An example is the 'tadka/tarka' added to lentils('daal') or pouring ghee over boiled rice to enhance the taste. Probably the main reason of putting ghee on steamed Modak is to enhance the taste.
From the story behind the traditional association of Modak with this festival my guess is that ghee was added to Modak to make it soft, tasty, easy to eat and filling.