Can a reactivated TCB help the market?

---

Mamun RashidThanks to a section of economists, media and policy planners, they could successfully create a hype in favour of a reactivated Trading Corporation of Bangladesh (TCB). What they want is reactivation of a moribund TCB with a view to stabilising the volatility of the prices of essentials. The government, especially ministry of commerce seemed to have lent their both ears to them. We have heard our commerce minister instructing the TCB officials to purchase the basic commodities taking into account price movements in the international markets. He was also heard suggesting TCB to purchase the commodities when prices of commodities go down during the harvesting period in the international markets. This measure will allow sellers to sell commodities at lower prices in the local market and thereby stabilise prices. This indeed was a good suggestion. However, as a humble student of Economics and having directly worked with public sector commercial and manufacturing undertakings as a servicing banker for many years, I was thinking loudly whether a reactivated TCB could help stabilise the market in the twenty first century Bangladesh. State trading corporations like TCB was created in the era of controlled economy, with a view to managing and driving entire imports and exports of a country while its government keeping its control over the distribution channels. We have seen those are still working well in Soviet Union or China and some other countries or territories. Even if we agree to that school of thought, we are talking of a mammoth organisation with huge budgetary allocation from the national exchequer to manage an ever expanding trading sector which now stands at about USD 52 billion. In fiscal year 2010-11, TCB, through its 2,245 dealers across the country sold 10,135 tonnes of pulses, 27,785 tonnes of soybean oil, 2,000 tonnes of peas and 20,000 tonnes of sugar with a turnover of Taka 4.3 billion. I am sure, any reader having some understanding about our food grains or import of essentials would be telling me, that the TCB's turnover was just a peanut compared to the total trade involving the essentials. Little wonder why TCB would be continuously failing to do justice to its perceived mission of stabilizing the market of essentials, unless our honorable members of the parliament decide to go back to a communist or socialist rule. We have heard our commerce minister telling us that his government has already allocated Taka 10 billion for the TCB at a lower interest rate for purchasing commodities, while the state trading agency received Taka 690 million in subsidy last year. Though my market economist friends would term this as a step to create serious distortion in the market, I know how tough it was for our commerce ministry to get this money released from the state coffer. My question is, did we really need this? Or what benefit did it bring for the common people or the person on the street? Taka 4.3 billion turnover created by TCB, is nothing compared to almost Taka 750 billion import of food grains and essentials. Our questions also remain unanswered, while we see queues in front of any fair price shop or `rice-truck' in major city spots becoming thinner and thinner. This is making the 1972 or 1974 pictures that we may recall rather faded ones. One may argue, can the government ignore its responsibility towards stabilising the market? Of course not. However, if my friends keep on telling the government to stabilise the prices of vegetables and fish, without creating synergy between the producers' cooperatives and the consumer cooperatives like some other countries, this will be a complete futile exercise. Organisations like the TCB, I am sorry to say, can't do anything here. In the similar way, if government wants to stabilise the prices of rice, wheat, sugar, edible oil or pulses, they have to be ready with much larger subsidy allocations with very large state-owned storage or ware house facilities and may put this business to be managed by a food corporation like India and few other countries, again not the TCB. The limitless subsidy may also cause substantial bleeding to the national balance sheet. In the 21st century of private sector led growth, it would be a `no brainer' too. Rather gradual shift to better capacity building within the government, ensuring accountability in politics with reduced or no `sponsorship' of unscrupulous businessmen, and bringing in `speed' in its' decision making process, the government can earn a lot in this direction. A `happy marriage' between monetary policy with that of fiscal measures can also yield positive result in this space. (Mamun Rashid is a banker and economic analyst. E-mail: mamun1960@gmail.com)