Curbing price spiral

Bangladesh follows market economy. Under this system, the decisions on investment, production, distribution and consumption are supposed to be based on supply and demand. The prices of goods and services are expected to be determined based on the demand and supply. But in reality, a few powerful players, who are the main decision makers in the areas of production and consumption, control everything and thus also the economy of the country.
Here the hypothetical laissez-faire and the free market variants do not work at all. The price fall of potato this season is a very good example of the market monopoly in the country, where the farmers have to count a loss of Tk 4.0 to 5.0 per kilogram of potato. In the retail market the potato is sold at Tk 15 to 20 per kg. Here the market price is not determined based on the demand and supply. Rather, a few powerful businessmen control the prices of goods and services by forming syndicates. The syndicates are so powerful that the government cannot do anything against them. So, the farmers are left with no other choice but to sell their goods below their production cost or store these only to rot eventually. They are the worst sufferers in the long run.
The market monopoly resulting in an upward trend of prices is a key challenge for the country to continue the current pace of socio-economic development by ensuring a greater stake for the poor and limited income people. Any hike in prices of essentials leaves the poor people in trouble. To tide over the situation they have to cut some important items and maintain a minimum standard of living. Most of the poor spend more than a half of their income on food. Price hikes force them to change their food habit leading to malnutrition. Only a handful of people benefit from it by making big profits at the cost of sufferings caused to millions of poor people.
The market monopoly is not a recent phenomenon. The problem has been there for long. However, it is high time the government made proper intervention in the market to arrest the upward trend of prices of essential commodities for the sake of the survival of lower and middle-income people. The government agencies concerned should make efforts to understand the market structure before making any intervention to promote balanced development. Then the Purchasing Power Parity (PPP) and the Gross National Income (GNI) of the people will increase and the development will be meaningful to every segment of society.
The writer is a graduate student at the Department of Development Studies, University of Dhaka. [email protected]