Editorial
Bumper Crop Management
In a high-profile press conference last Tuesday, with his top aides flanking him, Finance Minister SAMS Kibria struck a populist note claiming that the rush of buyers in the market pointed to a good health of the economy. That was no sign of recession after all, seemed to be the finance minister's point of satisfaction. In the operative parts he went on to defend government borrowing which stood higher by 20.33 per cent during the six-month period to December, 1999 as compared with the previous level arguing that neither did it fuel inflation nor crowd out the private sector.
So far as the containment of inflationary pressure is concerned, credit must go to the weather-induced record Aman harvest on top of an equally good Boro crop we had reaped earlier on. The government's fiscal policy intervention had but little to do with it, to put it mildly. Government's credit lies in timely helping the farmers with necessary inputs. As far as the private sector's credit share goes, it stood at 10.63 per cent during six months to December, 1999 in comparison with the government sector's 20.33 per cent as mentioned above.
The record Aman harvest and the residual stocks of Boro rice bring to bold relief our limited storage capacity. This goes to handicap any big Aman procurement drive. Price support to the farmers might be lessened to that extent as the rural demand slumped with the attendant possibility of a recessionary trend setting in.
On the other hand, if the government should decide to energetically go for a procurement drive it would have to borrow from the banking system risking an upward push to inflation. This will neutralise the gain in the price index otherwise obtainable from the fall in food prices induced by a higher availability of cereals.
The government could have done with less borrowing from the banking sector had the revenue collection picture been satisfactory. But it is not.
Chairman of the National Board of Revenue Abdul Muyeed Chowdhury said that revenue earning fell Tk 9.33 billion short of the target during six months to December, 1999 largely because of lower customs duty collection. Hence, as we see it, the predilection to government borrowing has increased that much more.
The government has to strike a balance between intake and offtake of cereals. This is to give the growers a price support together with an incentive for the future while ensuring that the food prices are stabilised at an affordable level for the commonman.
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