Tuesday, December 25, 2007

Lost in Living

Rising price of essentials is robbing people of their real income

In the last few months the prices of essentials have increased by 20-30 per cent; this, along with an ever-increasing inflation, have hit the lower and middle income groups really hard. The worst affected people belong to the lower and middle income groups, for most of whom life means a daily struggle to make ends meet. Spiralling prices of rice and baby food, which have become a major issue at the fag end of Khaleda Zia's last term in office, have not been handled properly by the current caretaker government. Though during Khaleda's time several syndicates run by the then Prime Minister's elder son was blamed, the current government has not been able to nab anyone for manipulating the market. What is disappointing is the shoddy manner in which different advisers have come up with their own explanations about an upward curve in the market prices. While an adviser has accused the Indian commodity market for influencing its Bangladeshi counterpart, another has found the necessity to call for the service of the Rapid Action Battalion to 'fix the market'. The strangest comment has come from the Finance Minister, according to whom prices have increased because people's income has also seen a remarkable rise in the last few years. The idea is preposterous; it would have made much sense if it had been meant to be a joke, but A.B.Mirza Md. Azizul Islam, our Chancellor of Exchequer really thought his statement true. Islam's comment is eerily similar to accented statements that former Finance Minister Saifur Rahman (like Islam, a World Bank man) used to make. Saifur once advised citizens to have aubergine only during the month of Ramadan, on another occasion he said that people must tailor their food habit in line with the rising prices of essentials. Islam, before making the situation worse for his fledgling administration, must remember the soaring inflation, which is about to hit the benchmark 10 percent. Islam must not forget that this is for the first time in the last 12 years that the country is experiencing the menace.
The inflation may as well turn worse because of the deluge, which has caused major disruptions to the supply of goods. Though the government's war on corruption has been commendable and a much-awaited popular drive to free the country of the depraved elements, there is no denying the fact that the crackdown has shooed many good businessmen away. What is scary is hyperinflation, a dangerous trend in the economy when inflation feeds itself. Instead of talking big and delivering a-little, Islam and his ministry must put its priorities right to set the kitchen market in order, before Ramadan makes market-prices unbearable for the ordinary citizens. Bangladesh Rifles' Operation Dal-Bhat has to be widened, the Trading Corporation of Bangladesh should be involved more into the market so that the market price comes down to a tolerable level, businessmen must be encouraged to open letter of credit; at the same time the government must take immediate anti-inflationary measures. The job is indeed tricky as the country has faced one of the worst deluges in the last 10 years, and a huge post-flood rehabilitation plan has been expected the government. More government expenditure may fuel further inflation, putting the prices far beyond the means of the masses. This is indeed alarming, as a famine-like situation has been feared in the country if seeds are not sown within the next one month. The inflation that is said to have been at 10 percent a year, is unofficially as high as 15 percent, and if immediate food-safety measures have not been taken it is predicted to double within a few months. An increase in the price of oil on the market, the flood and a volatile international market are primarily to be blamed for the spiralling prices of essentials. And on top of it all, different infamous syndicates are at work too, nothing can otherwise be explained by a 100 percent price gap between the retail and wholesale market.

The evil nexus between the syndicates and suppliers has to be broken. At the same time the government should not view different businesses as enemies. Sheer unemployment (in which the government has made some contributions by closing down the jute mills), coupled with a climate of apprehension has given way to this stagnation that economists in the country are thinking we are at. The scariest prospect is a hyperinflation, a market where rice or atta is too pricy even for the middle class. We are in a situation where ordinary people have started to flirt with the idea of hoarding for the rainy day, and this is where an artificial increase in the demand fuel further price-hike. There are risks that things become too expensive during the Ramadan when prices of essentials naturally increase.
We have put much hope and trust in the current caretaker government. So far the government has delivered well. The war on corruption has witnessed the arrests of almost all the major graft suspects, the separation of judiciary has been completed, a right to information act is in the offing, and a flawless voter list and a national identity card project are in full swing. But with a sunken heart we see the government not doing enough to tackle the crisis on the market, which is eating at the real income of the masses. When it comes to fixing the ills with rice and baby food, the government has floundered, and it has floundered badly. It should take immediate steps to regulate the market, and everything related to the national economy must be handled with more care.

© Ahmede Hussain