Soaring prices batter people across the class lines
Sunday, 30 August 2009
Amirul Islam
THE electorate in Bangladesh, in general, was swayed by Awami League's pledge that it would bring down the prices. The landslide victory of AL was prompted in large measure by this loud promise. Some 20 million people are reported to have reverted below the poverty line. This happened due to the fall in real income of many because of soaring prices.
The soaring prices have battered people across the class lines, but the poor or 40 per cent of the population, remain the worst sufferers. More people became poor or nearly so in recent years as available statistics show. The demand for price control was growing, and quite naturally so as the AL-led grand alliance had exploited the price issue for going to power.
Now AL is finding it difficult to keep its promise. In eight months, the AL-led alliance government failed to bring the prices down after an optimistic start. The commerce minister reportedly faced a cabinet apparently angry at his ineffective sound and fury for price regulation. Prices of kitchen items shot up without any justification as the Ramadan was approaching. The government has to go for decisive action if it really wants to redeem its promise on the prices. Market monitoring ought to be the first step if the government is really keen to bring down the prices and stabilise the market. Price stabilisation, which cannot be achieved overnight, calls for a number of measures. In the short term, the government should certainly go for an all-out price monitoring, which gave the emergency caretaker government some success towards the end of 2007. It is a puzzle why market monitoring was not developed into a sustainable and result-oriented system. Bangladesh Rifles (BDR) and police personnel were seen frequently visiting the kitchen markets in Dhaka every day at that time and that had some favourable positive impact.
The government should restart vigilance immediately to send the signal that price manipulation would not be tolerated. Market monitoring envisages regular watch over the movement of the prices of essential items such as rice, wheat, cooking oil, sugar, pulses, etc. By monitoring the wholesale and the retail prices, the government can follow up at weekly meetings with the traders. No offender has yet been taken to task for hoarding and profiteering. The laws in this regard only need to be applied to get the results.
However, this is easier to say than to do. Some members of parliament also happen to be businessmen. Many of them are traders in commodities. Reportedly, they spent quite a lot for getting elected. The public perception is that they are only likely to recoup their election expenses. Market monitoring would bring results only if the government distances itself from the elements in the power matrix who have business interests. Then only it would be able to apply the law and regulations against the market manipulators without any fear or favour.
A study done by a former finance adviser to the caretaker government was reported to have shown that a small number of big importers control the market of essential consumer goods like cooking oil and sugar. The importers act almost like a 'cartel' to decide the prices. The solution lies in breaking up the cartels and allowing many medium and small importers to do the job.
In the absence of a long overdue competition law, Bangladesh cannot deal with monopolies, cartels and other unfair trading practices. It is the responsibility of the government to ensure competition in the market by adopting a competition policy and the supporting laws. The instruments or institutions to enforce the policy and the laws have to be created by the government.
The latest experience with the TCB has not been encouraging. Even the commerce minister expressed his 'anger' over the TCB's incompetence and inability to deliver the goods. Indeed, TCB needs a drastic overhaul of its management and operations.
There can be no market economy without any competition and regulations. The government should play a more pro-active role in ensuring supplies of, at least, some essential commodities in the market by providing resources to the appropriate -- and effective -- state-owned entities to intervene in the market from time to time. Here imports of essentials in large scale and their sale at fair prices can benefit the consumers. Well-designed government intervention can create competition in the market to stabilise the prices.
Considering the market secularities in Bangladesh, the government should, take realistic steps to intervene properly and selectively in, and monitor the market. It should address the problems of various sorts of market imperfections through policy measures and break up the syndicates, where they operate, in order to make it a competitive market for the benefit of the economy as well the citizens.
THE electorate in Bangladesh, in general, was swayed by Awami League's pledge that it would bring down the prices. The landslide victory of AL was prompted in large measure by this loud promise. Some 20 million people are reported to have reverted below the poverty line. This happened due to the fall in real income of many because of soaring prices.
The soaring prices have battered people across the class lines, but the poor or 40 per cent of the population, remain the worst sufferers. More people became poor or nearly so in recent years as available statistics show. The demand for price control was growing, and quite naturally so as the AL-led grand alliance had exploited the price issue for going to power.
Now AL is finding it difficult to keep its promise. In eight months, the AL-led alliance government failed to bring the prices down after an optimistic start. The commerce minister reportedly faced a cabinet apparently angry at his ineffective sound and fury for price regulation. Prices of kitchen items shot up without any justification as the Ramadan was approaching. The government has to go for decisive action if it really wants to redeem its promise on the prices. Market monitoring ought to be the first step if the government is really keen to bring down the prices and stabilise the market. Price stabilisation, which cannot be achieved overnight, calls for a number of measures. In the short term, the government should certainly go for an all-out price monitoring, which gave the emergency caretaker government some success towards the end of 2007. It is a puzzle why market monitoring was not developed into a sustainable and result-oriented system. Bangladesh Rifles (BDR) and police personnel were seen frequently visiting the kitchen markets in Dhaka every day at that time and that had some favourable positive impact.
The government should restart vigilance immediately to send the signal that price manipulation would not be tolerated. Market monitoring envisages regular watch over the movement of the prices of essential items such as rice, wheat, cooking oil, sugar, pulses, etc. By monitoring the wholesale and the retail prices, the government can follow up at weekly meetings with the traders. No offender has yet been taken to task for hoarding and profiteering. The laws in this regard only need to be applied to get the results.
However, this is easier to say than to do. Some members of parliament also happen to be businessmen. Many of them are traders in commodities. Reportedly, they spent quite a lot for getting elected. The public perception is that they are only likely to recoup their election expenses. Market monitoring would bring results only if the government distances itself from the elements in the power matrix who have business interests. Then only it would be able to apply the law and regulations against the market manipulators without any fear or favour.
A study done by a former finance adviser to the caretaker government was reported to have shown that a small number of big importers control the market of essential consumer goods like cooking oil and sugar. The importers act almost like a 'cartel' to decide the prices. The solution lies in breaking up the cartels and allowing many medium and small importers to do the job.
In the absence of a long overdue competition law, Bangladesh cannot deal with monopolies, cartels and other unfair trading practices. It is the responsibility of the government to ensure competition in the market by adopting a competition policy and the supporting laws. The instruments or institutions to enforce the policy and the laws have to be created by the government.
The latest experience with the TCB has not been encouraging. Even the commerce minister expressed his 'anger' over the TCB's incompetence and inability to deliver the goods. Indeed, TCB needs a drastic overhaul of its management and operations.
There can be no market economy without any competition and regulations. The government should play a more pro-active role in ensuring supplies of, at least, some essential commodities in the market by providing resources to the appropriate -- and effective -- state-owned entities to intervene in the market from time to time. Here imports of essentials in large scale and their sale at fair prices can benefit the consumers. Well-designed government intervention can create competition in the market to stabilise the prices.
Considering the market secularities in Bangladesh, the government should, take realistic steps to intervene properly and selectively in, and monitor the market. It should address the problems of various sorts of market imperfections through policy measures and break up the syndicates, where they operate, in order to make it a competitive market for the benefit of the economy as well the citizens.