Price hike of essentials: Crisis or manipulation?

This happens when politicians turns obsessive about politics. Politicians, especially those running the statecraft, are supposed to provide good governance that paves the way for integrated development in all sectors. Instead they prefer jousting with one another, and matters of governance get sidelined. As a result it is the poor and the ordinary citizen who are most affected.

In spite of all the pledges of "dal-bhat" that the alliance government made in its election manifesto in 2001, the grand plan has remained a dream, a wish-list and an illusion. The plan has failed because good governance means good plans and good systems. Bad economics and bad governance have contributed to the recurring crises in the country.

Speaking about dal-bhat that every Bangladeshi citizen must have to stay alive, the availability of dal has posed a serious problem. As for dal that is one of the staple food items of the people, nobody knows for certain what is the actual acreage under dal cultivation. Whether it's case of masur dal, or onion or garlic or ginger or even potato or sugar, the concerned administration has hardly cared to collect any statistics that could give them an understanding about the production cum consumption data.

So, when a crisis strikes, we resort to ad hoc measures that create more problems. The basic problem is that in spite of the fact that agriculture is the mainstay of our economy, and a vital sector that continues to brighten our lives, it remains as neglected as ever. With the winding up of the BADC, no branch of the administration has replaced it to meet the accelerating needs of a growing population.

To cut a long story short, callousness and indifference, people now allege, have become a Bangladeshi trademark in governance. And it was on display again as the news item reporting the stoppage of export of wheat, dal, and sugar by India to all countries, including Bangladesh, came to public attention. Immediately after the announcement, the price of lentil (masur dal) shot up by 10 taka per kg, sugar price per kg zoomed to 64 taka from 54 taka, and the price of potato, onion, and garlic, which are not included in the list, shot up, defying reason.

Reports published in the newspapers indicate that the intelligence agencies, as per the instruction of the commerce minister, have identified the vicious circle working behind the scenes in creating such artificial crises and consequent price spiral. The identity and number of such importers and hoarders have been reported to the minister. Reports further indicate that they have been forwarded to the PMO but no green signal has been obtained till now to bring the culprits to book.

Unfortunately, the change of ministers in the commerce wing thrice during the tenure of the alliance government has done little to bring down the commodity prices. Across the country, the dal-bhat that the alliance government promised in their election manifesto, has remained just a promise. The poor Bangladeshi citizen, whose basic food includes dal and onion, have been hit the most by the accelerating prices (despite the fact that these items are available in the market ).

Taking it for granted that the vagaries of Bangladeshi weather might have played havoc with the crops, but the weather or rains were not the only reason for the shortfall. For as culpable was a sleeping bureaucracy which failed to anticipate the shortfall for whatever reason. Similarly bizarre was the mysterious silence and inaction in the corridors of the two ministries.

As for onions or dal, imports sometimes outstripped the demand, yet onions and dal hoarded somewhere could now be bought at 25 taka and 68 taka a kg in the market. During the month of Ramadan, just two months away, consumption of onion and different varieties of dal increases, defying the routine pattern, and conceivably some unscrupulous traders would take a chance of manipulating the price simply for profit mongering.

With the nation going to the polls in about six months, essential food item price might be a crucial factor in deciding the polls victory. Politically, this might become a ticking bomb. Incidentally, it is worth mentioning here that in 1980 when onion prices in India rose to Rs 5 during the Janata Party rule, it helped Indira Gandhi return to power. Here in our country we have a lesson to learn from such historical facts.

With fish, meat and chicken prices touching the roof, poor Bangladeshis do not look for anything beyond dal-bhat for their survival but, unhappily, production has fallen drastically in absence of logistic support and shrinking arable land for dal cultivation. Even when the population figure has crossed 140 million from 130 million in just about five years, the administration remains complacent with the statistics of demand and supply they had some decades ago.

On the other hand, the country has been too much import driven swallowing the bitter bill and bracing the capricious market mechanism played out by some insidious forces both at home and abroad. In a governance system that works, the agriculture ministry must inform the commerce ministry every year at the end of the dal harvesting season about the production quota achieved (against requirement) with indications of possible shortfall.

But meeting the shortfall by import, year in and year out, when the foreign exchange reserve is dipping fast and the economy showing signs of strain, is something that the country cannot afford now. Take the case of sugar price hike in the recent past. The bulk of the demand for sugar is met by import, because even if there has been a substantial increase in the consumption pattern, no attention was given to increase the sugar cane production or to upgrade the machinery in sugar mills for having increased yield.

In 2004-05 fiscal, 829,000 tons of sugar was imported during ten months from July to April. The import cost, it was learnt, stood at 12 taka per kg. With all taxes amounting to about 75% of the purchase price plus transportation cost and margin of profit included, the market price of one kg of sugar could have been 25 taka per kg. But at that time sugar price per kg was between 28 to 30 taka and above.

However, in the 2005-06 fiscal, in about the same ten month period, without any justifiable reason only 336,000 tons of sugar were imported (possibly influenced by an impression that fifty percent of the population have suddenly become diabetic and sugar consumption has suddenly declined!).

Sugar price in the international market in the meantime shot up and the average import cost per kg this time stood at 16 taka. In the same way, with tax, transportation cost, reasonable profit and other margins added the market price of sugar could go up to 33 taka at best. But taking advantage of the smaller quantity of import this time, the importer cum hoarder "syndicates" (as they are called these days) made the most of a vulnerable situation.

Taking into consideration that the exchange rate of taka against dollar has fallen continuously during the past year, market price of sugar might be expected to go up to 40 taka per kg, but people still cannot buy sugar below 60 taka per kg. Ironically, with government machinery remaining blatantly ineffective and blissfully indifferent, consumers became hostage to the so-called syndicate who manipulated the market as they wanted.

The story with most areas being opened to the private sector is much the same. Even where bids are invited, since the decision-making process is cloaked in secrecy, the scope for favouritism increases. The only solution is to ensure greater transparency in the government's decision-making process. Which means that once a license is awarded, all the papers relating to it, including those of the losers, should be available for scrutiny.

But such snags will continue to have a hemorrhaging effect on the country as long as the root of the problem is not cut off. With the country yet to evolve a way to fund its politicians, even honest corporate houses have no option but to find ways to generate unaccounted for money. It is estimated that a single parliamentary election alone could see political parties spend around 1,000 crore taka to pay for poll expenses. Politicians also need to draw on business resources to nurse their constituencies. Given the mind-boggling numbers, corruption naturally is built into the system.

The system then begins to feed on itself. Politicians who need money will give licenses and contracts to businessmen so that they can make money. And when the businessman gets into trouble it's only fair, from his point of view, that the politician tries to protect him whether through preventing investigating agencies from taking any action, or getting banks to lend money to the group without adequate collateral.

This is just another instance as to how a government in a sense is being held to ransom, dictated to not only by radical ideology but by a group of vicious business players. Most importantly, the prices of essentials now are certainly outrageous. Undeniably true, the economic strains in any country exacerbate the strains in the rank and file of the population and pose a threat to the flowering of democracy, good governance, and last of all, the hope of returning to power again.

Md. Asadullah Khan is a former teacher of physics and Controller of Examinations, BUET.