Will new govt move to tame prices work?

FE Team | Published: July 19, 2007 00:00:00 | Updated: February 01, 2018 00:00:00

Shahiduzzaman Khan, News Analysis
The present interim government has been examining all options to tame down the prices of essential commodities since its coming to power. The prices are not coming down to the level the people are keen to witness.
However, the government this time is going to monitor the pattern of opening of the letters of credit (LCs) through software to be developed jointly by the Bangladesh Bank (BB), the National Board of Revenue (NBR) and the Bangladesh Rifles (BDR). A report published in the FE last Wednesday suggested that the software in question would be installed in all commercial banks. A high-powered committee comprising top officials of the BB, the NBR and the BDR has been formed for taking necessary measures to implement such decision.
The government expects that the new monitoring system will help curb discrepancies in LCs and actual imports that are thought to be solely responsible for short supply of imported essential commodities in the market. The importers who are trying to influence the market by suppressing information about actual position of their imported products will be easily identified in such a way. The authorities have already decided to collect information about some essential items including rice, wheat, sugar, milk food, edible oil, pulses and onion at the initial stage. All other imported commodities will come under such monitoring system phase-wise.
Meanwhile, the opening of LCs of some essential items including rice, wheat, sugar, edible oil, milk food and onion recorded a rise during the first half of the current month compared to the of the corresponding period of the previous year. If the trend of LC openings is analysed, one is sure to find that imports of essential items are rising but the prices are not coming down. Why? Undeniably, there must be some discrepancies somewhere. Now with the updated system, such discrepancies could be identified and eliminated easily.
Earlier, the caretaker government began with the arrests of the alleged hoarders and black marketers. The businessmen got panicky and many of them refrained themselves from opening LCs. The authorities sat with the businessmen several times in order to convince them that genuine businessmen had nothing to fear. It was a hard job. At the end, the businessmen regained their confidence back and started to open LCs. Duties on many imported essential commodities were waived or reduced.
After all these efforts, prices of essential goods did not come down considerably except sugar. What was wrong? The authorities held more meetings with the top businessmen of the country and tried to find out the role of the middlemen and price manipulators. Successive governments tried to identify price manipulators and syndicates several times, but to no effect. Business syndicates thrive on close cooperation from the ruling power matrix. No previous governments could nab them due to their close proximity with the people in power.
However, the retailers and wholesalers in the market still blame each other for unusual rises in the prices of essentials. Retailers say the wholesalers hoarding essential commodities are responsible for the soaring prices while the wholesalers said the retailer's bump up the prices to make fast cash. In such a way, the kitchen market continues to present a harrowing scene of ever-rising prices of essentials. Prices of essentials keep rising. Few things affect the daily life of the common man, as do the prices of essentials. If prices are not controlled, the common people's interest will go by default, whatever the gains in other areas, be they real or rhetorical. When the state of emergency was proclaimed and the interim government under Fakhruddin Ahmed took over, the people by and large welcomed the changeover, maybe because the years of poor governance had made them impatient. At that time too, inflation, along with lawlessness and corruption topped the list of public woes. Not only did prices keep soaring during the last years of Khaleda Zia's rule but also some irresponsible statements made by the functionaries of her government and their insensitivity to public suffering shown by some high-ups further compounded the crisis.
In this context, the caretaker government's initiative for holding dialogue with importers, wholesalers and traders was a welcome move. But what is important at this stage is that the trust and confidence must be restored among the traders and the citizens must not be harassed in business sector or any other sector. Stability must prevail in the market so that no nervous situation is created triggering price rise.