Eid and economics of festival

Asjadul Kibria | Published: April 15, 2023 20:31:37

As fasting gets in the fourth week of the holy month of Ramadan, the Eid-ul-Fitr as a religious festival draws near. Muslims across the world will celebrate their one of the two core religious festivals next Friday or Saturday, subject to appearance of the new moon in different countries, including Bangladesh. This Eid is celebrated on the first day of Shawwal, the tenth month of the lunar calendar. The day's celebrations start with a special- prayer congregation in the morning. Fasting is not permitted on the day, and Muslims are instructed to come together with family members, friends, neighbours and community people to celebrate the occasion. It turns out to be a carnival of feasts, sweet treats and donning new dresses.
In fact, Eid-ul-Fitr is considered the biggest festival in Bangladesh where around 91 per cent of the population is Muslim. To celebrate the day of festivity, they take extensive preparations that stretch over a month, including Ramadan. It is interesting to see that besides observing the rituals of the holy month, Muslims also engage in various business and trade centring the Eid. Fashion houses come with a lot of newly-designed attires luring the consumers. People rush to buy new clothes for their children and relatives as the Eid day approaches. Shopping centres see large crowds, especially in the last week of Ramadan. Around 50 per cent of the annual sales of the fashion industries take place on the occasion of Eid-ul-Fitr. This is true for many other sectors. Take shoes as an example that come after clothing in terms of demand during Eid shopping.
To arrange feasts in Eid, the preparation seems much bigger. Sweet vermicelli, popularly known as Shemai in this country, is a must in every house. Various types of vermicelli are available in the market during the festival. To cook biriyani and pilau, demand for aromatic rice jumps before Eid. People also see the price hike of chickens, beef and mutton and necessary spices.
As aggregate demand increases on the occasion of Eid, price situation tends to deteriorate, making it difficult for the low-income people to celebrate the festival.
Fortunately, almsgiving spree during Ramadan brings some relief to hardcore poor. Some Muslims pay their Zakat, the obligatory charity set in Islam, in Ramadan to assist those who are poor and needy. Besides individual effort, charity organisations mobilise and distribute Zakat in cash and kind across the country. Thus, money transmission increases before Eid, adding vibrancy to what is coined as Eid economics. The velocity of money is the rate at which consumers and businesses in an economy collectively spend money. Again, eligible Muslims also pay Sadaqatul Fitr just before the Eid day or before the Eid prayer. These also help the poor and marginalised to get some good food on the festival day.
There is, however, no exact estimate on the size of the Eid-centric economic activities. A guesstimate showed that it was around Tk1.50 trillion in the last year when Eid-centric trade bounced back heavily after two years of Covid-19 sluggishness. The boom in monetary transactions during the Eid is reflected in the growth of money supply. Statistics available with Bangladesh Bank showed that money supply increased by Tk 337.98 billion in April last against Tk 89.70 billion in March 2022. Thus, money supply, in terms of broad money (M2), stood at Tk 16.63 trillion in April 2022 which was Tk 16.30 trillion in March.
During the festival, cash base of the economy also increases. As the last Eid-ul-Fitr was celebrated on May 3, 2022 in Bangladesh, las April had witnessed a higher flow of cash and monetary transactions. The central bank statistics showed cash base of the economy stood at Tk 3.39 trillion in April 2022, recording a growth of 5.81 per cent over the previous month. The value again declined to Tk 3.30 trillion in May last year.
Pahela Baishakh, the first day of Bangla new year, has also emerged as a big festival day in Bangladesh. Before the Covid-19 pandemic hit in 2020, there was a persistent growth in Baishakh-centric economic activities where clothing and food appeared as the two core areas of business. Baishaki business also recovered in the past year although it co-existed with Eid-ul-Fitr as there was an around three-week gap between two festival days. This year, the gap came down to one week. Nevertheless, appeal of Pahela Baishakh is there and Baishaki shopping spree does not lose the momentum. Baishakhi bonus for the government employees creates some additional demand in the market.
As two festivals come almost at a time, and the development will persist for another two to three years, the main focus of the festival economy is on Eid, will be on Eid. Eid bonus increases the amount of disposable income of a large section of people. Non-resident Bangladeshis (NRBs) also try to send more remittance to their families to celebrate Eid. All this fuels a consumption boom during the Eid which ultimately contributes to the country's Gross Domestic Product (GDP). So, it is time to get a comprehensive picture of the Eid economics and research wings of the government policy- planning bodies may come forward to launch a rigorous study in this connection. This will help in understanding the trends and patterns of consumer demand during Ramadan and Eid as well as status of outputs and supplies. This will also help in devising and revising some economic policies to support the trade and business activities of the festival.
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