Editorial
Exemption of taxes
Will it be enough to make rice affordable?
COMMERCE Adviser Zillur Rahman has given the media to understand that the government is seriously considering exemption of import duty on rice and that there could be duty cutbacks on some other essential commodities. Before taking the steps, the government would have to be first assured of the majority benefiting from such action, he was quick to add. We read a certain hesitancy into the adviser's conditional statement which appears out of steps with the urgency of the price issue requiring quick anti-dotes.
Lowering of customs duty or zero-tariff will definitely reduce the landed cost. To that extent, the prices should fall, even though admittedly, previous cutback on duties did not translate into proportional reduction in prices. In our peculiar context, with the international prices rising domestic prices go up but if those should decrease internal prices do not go down, not at least commensurately. Thus, there is an element of hoarding or artificial scarcity mongering and speculative trading which could only be offset by saturating the market with timely import and internal procurement. Domestic procurement affected by natural calamities having been low, we should have negotiated rice deals much earlier in the day with the same urgency we are doing it now. But only to see the international prices go higher by notches. We are now having to turn to World Bank to persuade India for reduction of their import price from US$600plus per metric tonne. The roller-coaster ride in regard to getting the promised rice from India has been unfortunate.
The crux of the matter is availability alone cannot ease the plight of consumers, because the real problem lies in affordability. Studies by Bangladesh Institute of Development Studies(BIDS) and Bangladesh Bureau of Statistics(BBS) clearly indicate substantial drop in real income of people. Income generation hitting a low and the purchasing power of fixed income groups taking a dip, most people cannot afford higher prices of food items, let alone their chain effects on prices of other essentials, transportation, education cost, health cost, and what have you.
This is the condition of fixed income groups; just imagine the unbearable plight of the landless and the ultra-poor. The underutilisation of the ADP has meant reduction of seasonal employment, especially under food-for-work programme. The answer lies in vigorous pursuit of VGD and VGF programmes as determined efforts are made to import more foodstuffs.
There is a limit to subsidisation in a resource-poor country. Let's not forget, advanced countries subsidise from their own resources, we don't. How much we can divert resource from other heads is to be carefully considered. In the short term, we may have to go for some subsidisation, but in the medium term, we must go all-out for higher productivity.
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