By The Numbers
Missing market mechanism
Yet another round of market monitoring by the members of joint forces, including Rab and BDR, is on. The joint forces have started their market monitoring operation from January 19 with twelve teams of six battalions of Rab visiting different markets in the capital, in a bid to control prices and prevent hoarding of essential commodities.
The galloping prices of all essential commodities have plagued the common people for quite some time now. Though the trend of price hike began around five years ago, it has now started a fresh upward movement, which is too unpredictable and surpasses acceptable limits.
The prices of foodstuff including rice, wheat, edible oil, pulses and baby-food have registered another round of steep increase in the recent days and are now selling at exorbitant prices. Such a soaring price situation has caused a nightmarish experience for majority of the people in the country, whether living in the urban or rural areas.
All the government efforts, like running fair price shops by BDR and limited open market operations (OMS) of rice, have proved futile to contain the price of the staple food. People are apprehending that the price of rice would rise further in the coming days.
The commerce ministry, which is mainly responsible for maintenance of price line, virtually did nothing to control the market during the tenure of the immediate-past government. There were two changes of the commerce ministers, reportedly for their failure to exercise enough sway in the market to halt the rise in prices.
The third commerce minister, who roared against the profiteering syndicates immediately after his taking over, finally said that he had no responsibility to control prices. The profiteers thus received an indirect encouragement and another round of price hike followed.
There is no denying that less than the projected production of Aman rice, due to two consecutive floods and Cyclone Sidr, is one of the reasons for the soaring rice price. The floods and cyclone that wreaked havoc on the country's agriculture damaged many corps, including Aman.
The recent unbridled prices of all essentials are attributed to some other factors as well. Shortages of essentials in the market were caused by jitters owing to the crackdown on the businessmen, who refused to import the essentials leaving the entire supply chain disrupted. Such things are bound to happen in an import-led market where dishonest businessmen still get everything their way.
Panic spread in the business arena as the joint forces started raiding godowns, the National Board of Revenue started digging into bank accounts, and Anti-Corruption Commission started arresting top businessmen. These actions have had serious economic implications and the situation forced the chief adviser of the CTG to float the Better Business Forum in a bid to build confidence with business.
The punitive measures taken against the top business leaders that created a pervasive sense of fear and insecurity in the business circle, is still taking a terrible toll on the section of people who are not liable for any sorts of wrongdoing.
The common perception is that the prices of essentials, particularly of foodstuff, will not come down until the confidence of the business community is restored. Panic still persists as the government has engaged joint forces for market monitoring. The only way to revive the confidence is to let the businessmen operate fully in the markets, who are in fact the real players. And here lies the need for an efficient market management mechanism.
The market mechanism, the operation of the forces of supply and demand, is the very heart of the market system. It can only operate fully when certain market behavioral norms are followed. But intervention by the government, in the normal operation of market, make prices unstable and diverge from the equilibrium, often in an abrupt manner. This is the situation what is now prevailing in our markets.
The wisdom that the government has shown in rejecting the suggestion of the country's leading economists, not to involve the members of the joint forces in market monitoring, is a disappointment. The latest round of market monitoring by the joint forces is likely to be an exercise in futility.
What needs to be brought under scrutiny is the wholesale market to keep it affluent with an unbroken supply chain of foodstuff. Manipulation of supply-side economy clearly played the trick of shooting the price of rice from Tk 25 up to Tk 42 within weeks.
Therefore, the CTG should take a realistic overview of the market situation, evolving a mechanism to bring efficiency in market management.
An efficient market management mechanism based on the information on domestic and international market trends can play an all-important role to keep the prices of essentials in check. Proper collection of information and coordination of activities based on it is the bare minimum of doing of which is indispensable to establish a long-term and effective control on prices. Force and coercion have very little place in the market management mechanism.
The CTG is quite unable to ascertain the actual demand and supply position of essential commodities in the market, as the market management mechanism is missing. This is really one of the reasons worsening the level of supplies in the markets. A volatile market situation cannot be controlled involving joint forces for monitoring instead of applying the usual mechanism prescribed for efficient market management.
The concerned agencies of the CTG recently arranged a meeting seeking opinion from the eminent economists and market experts to tackle the volatile market situation. The economists and market experts suggested for evolving a desired market management system to equip the government with information on stocks of essentials based on demand.
Bangladesh has adopted a free market policy since 1990s, where the prices are to be ascertained by market forces and competition. Market monitored by the joint forces is by no means an effective measure to establish a long-term control of prices of essentials.
Though a free market provides the government with the scope to intervene in and regulate the market in public interest, it should promote the operation of a safer and sound market economics so that market mechanism can be effective.
Price of essentials is such a crucial factor that directly affects the life and living of the majority people of the country, whether in the rural or urban areas. The measures so far taken by the CTG have earned appreciation from the people. But it is now being replaced by despair, and even desperation, as the majority of the people have been groaning under the crushing burden of galloping prices.
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