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The post-flood inflation

Mahmudur Rahman | September 12, 2019 00:00:00

Once the sensationalism has worn off people, especially policy planners tend to forget that there's inflation related to the post-flood situation seasonally. While economists pore over point to point inflation as a whole there's an almost eerie silence over how the flood-affected actually rebuild their lives after the photo-session immediate aftermath of relief. Those impacted lose home, cattle and their belongings and no organisation is bothered to address the issues. They are left to fend for themselves, some of them falling in to the vicious cycle of loan debt. What it does is to undo the gains, however paltry that these people may have made through bumper crops and the recent Eid cattle sales.

On the other hand, the middle class are faced with the inevitable battle to make ends meet with the prices of essentials, especially vegetables, soaring on the back of short supply due to crop loss. Hapless consumers are left either to fork out extra money to pay for inflated prices or be content in reducing consumption by buying less and having to manage with that. It falls in the face of supposed food self sufficiency that the slightest vagaries of nature can pack a wallop of an impact. The age-old shortage of silos to store food grains looks as if it will never be resolved. Add to that the lack of facilities to store the more perishable product such as vegetables, an additional whammy. The floods are seasonal and expected but don't affect all parts of the country. That allows for storage facilities in lesser flood-prone producing areas. But not only is there an absence of such facilities but also the middle man makes ample hay. Prices are dictated by supply and demand equations and there's no monitoring by any organisation to make sure these remain within manageable numbers.

There are no government initiatives to speak of by which such storage facilities are even planned for and the absence of platforms of protests add to nothing being done. In the meantime countless projects of the Annual Development Programme are shelved in the last quarter of every fiscal for lack of or slow speed of implementation. While there has been a stress on agro-processing encouraged for the private sector, no such incentives exist to support storage facilities for the proverbial rainy day. As it is, the lack of production of products such as onions leaves us in the ridiculous situation of imported onions being sold at cheaper rates. While there are subsidies in different forms for the grain market including government fixed-price purchase, no one has solved the riddle of how to incentivise other commodities. As it is, the development partners for reasons best known to them frown on even grain subsidies. They too cannot provide answers as to how production costs and a profit can be made available to the farmers while keeping the end consumers reasonably satisfied. The earnings vs expenditure equation is never worked out whereas foreign currencies are gleefully spent on imports that are luxury and not taxed highly enough so as to discourage consumption. Part of these savings could go towards subsidies that are required for post-flood inflation handling thereby easing the woes of the hamstrung middle class.

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