Beneath The Surface
Current woes and ways out
THE economic hardship of the people was less under the alleged corrupt and inefficient political governments compared to that under the present so-called efficient and honest government" -- I was told by groups of people during my recent visit to some pockets in rural areas.
They further told me: "The price of rice during Awami League regime (1996-2001) averaged Tk. 10-15/kg, when a daily wage labourer could buy 4-6 kg of rice with daily earning. At that time, almost half of the budget could be diverted to non-food items like shelter, education, clothing etc. Prices of other essentials were not far out of line with their budget. During BNP regime (2001-2006) prices began to rise, people suffered economic setback, but never did the price regime go out of control as it has now. Now, the price of rice is Tk.32-33 a kilo, and a poor man can hardly buy 3 kilo of rice with his daily income. Almost the whole income is being spent to buy food, leaving nothing for non-food items. Real income fell by more than 30 percent within the span of a year and a half. The prices of other essentials like edible oil and pulses are sky rocketing." And finally they lamented: "Under the 'honest' government, we are suffering."
On the basis of this comparison one could come to the conclusion that an "inefficient" and "corrupt" government is better since it can keep people on an even keel. However, such comparisons may be meaningful but the conclusions seem to be dangerous.
None could, perhaps, disagree with the above-mentioned people's perceptions. But, better late than never, the government seems to have wakened to devise some short-term ways to face the woes. The most cited allegation by economists and politicians is that the government delayed in the procurement of food from the international market in due time and at reasonable price.
According to them, a stitch in time could have saved nine by allowing us to pay much less for imported rice, if measures were taken earlier. During the two months or so, the price of rice shot up by $100/ton to peak at $500/ton. Not long go, the price was hovering around $350-60/ton.
An African leader is reported to have once said: "Our economists are two handed economists. They have always, in their arguments, 'on the one hand' and 'on the other hand.'" Therefore, the leader was in search of a one-handed economist. The Finance Adviser Mirza Azizul Islam might be looking for one-handed economists. Everybody seemingly says to him: "Do something" without pointing out "what that something is." And from that angle alone, we suggest the following ways out to minimise the current woes of the people.
The most critical time is the next month or two, before the boro harvest comes home to augment supply in the market. Assuming that 10 million people are hard-core poor without purchasing power to buy food grains, we suggest that they should be supplied with 1 kg of rice daily, free of cost and for 45 days. That means the daily requirement will be 10 million kgs or 10,000 MT/daily. For 45 days, this amounts to 450,000 MT of rice. The total cost, at Tk.32/kg, comes to Tk. 1,500 corers or so.
Where could this money come from? Well, it can come partly from the money recouped from the corrupt people, partly from downsizing the government's revenue expenditure, partly from donors and partly from the budget. The shared austerity paradigm -- more applicable now than before -- should see that wastage of government revenue is brought to a minimum to divert the surplus to the destitute. All public institutions should cut their spending to put some money in government coffers. All employments in ministries/public organisations should be shelved at least for 6 months.
Second, the OMS operations should immediately be enlarged. They may stretch up to thana levels. Third, as the adviser for commerce rightly suggested, people should be provided with potatoes as a part of the VGF program. Bangladesh experienced a bumper harvest in potatoes, with farmers facing a decline in price.
The government could procure a portion of the surplus and supply it to the needy as a substitute for rice. This might serve two purposes: relatively fair price for farmers and food security for the poorest. Third, attempts to generate employment -- the real source of entitlement -- should be geared up soon. This means implementation of ADP projects at a faster pace than before. Fourth, the uncertainty looming large on the horizon regarding stability of the political process should be removed immediately. The comments of some of the advisers on various occasions are adding fuel to the already existing flame. The whole business community is gripped by panic.
And finally, the "pass-through" impacts of a rise in the international prices of imported commodities should be estimated, and sever penalties should be imposed on those who are taking advantage of the situation.
As I mentioned in my last write-up, we do not foresee a "famine" of the classical type in the near future. But we do foresee a severe "hidden hunger" following a drastic drop in the real income of the poor. After all, the lion's share of their energy stems from consumption of rice, and rice claims more than two-thirds of the family budget.
The long-term impact of that hidden hunger is no less painful than that of a famine. It is high time that we all wake up to face the upcoming woes.
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