Extension of fresh inducement for traders to no avail!

FE Team | Published: May 31, 2024 20:27:36

After a number of attempts in the past to rein in food price inflation through fixing the prices of essential commodities in the kitchen market came to naught, the government is learnt to have opted for a fiscal approach to resolve the tricky issue of food price control. The upcoming national budget for FY 2024-25 may see the new measure through a reduction of source tax that suppliers of essential commodities pay against their sales proceeds. Evidently, it is going to be yet another government incentive for the businesses dealing in essential commodities geared to reining in the volatile essentials market and the attendant inflation. The fiscal measure reportedly involves cutting the source tax on essential commodity supply by half ---1.0 per cent from the prevailing 2.0 per cent of the tax deducted at source. Undoubtedly, it will be another well-meaning move by the government to bring some relief for common consumers.
While appreciating the government move, it is worth noting that even in March last, the government's attempt at combating price spiral by fixing the prices of 29 essential items including lentils, potatoes, eggs, chicken, etc. fell flat. Earlier, in September 2023, the government in its attempt to control kitchen market prices, fixed the prices of onion, eggs and potatoes. But not even strict monitoring of the market and action by law-enforcing agencies to discipline errant traders, could yield any positive outcome. Apart from fixing of commodity prices and using enforcement agencies to control the volatile kitchen market, the government also cut import duties on essential items on several occasions in the past. Even by the end of last January, as instructed by Prime Minister Sheikh Hasina, import duties on rice, edible oil, sugar and dates, were reduced to ease inflationary pressure on common consumers ahead of the holy month of Ramadan. Unfortunately, again, the duty exemptions could not produce the desired results, as there was no reflection of the measure on the prices of the intended essential items.
Worse yet, shortly after the duty waivers were announced, market watchers reported an opposite trend. Far from decreasing, the prices of the items in question went up to the dismay of all concerned. But the explanation of the paradox from the traders' end was still stranger. It was that the time gap of about one month from the date of opening of the Letters of Credit (LCs) for the importable items to the availability of those goods in the market was the culprit. But what still defies imagination is the fact of the essentials' getting dearer rather than their prices remaining at least static! Clearly, no measure, however tough or conciliatory, has proved effective so far in motivating traders to cooperate.
As always, the government officials and the members of the public alike blame the so-called syndicates for the failure of the food price control measures. So, if past experience is to go by, there is hardly any reason to believe that the kitchen market operators have meanwhile undergone a change of heart. In that case, drawing from past experiences, the government would do well to weigh options with prudence before providing any fresh inducement to the kitchen market operators from the public exchequer.