The government's announcement on fixing prices of some essential commodities appears more as a blunt move than one capable of looking into the price situation along with supply-side realities as well as any man-made manipulation that may be instrumental to the price spiral. Now, if it were an artificial crisis born out of greedy market syndication, price fixing could have been a tool the government could resort to. Apparently, it appears that the government is convinced that the crisis is man-made, and hence the fixing. What actually makes the government think so?
Every time market volatility crosses limits, the authorities are quick to identify reasons behind unstable market behaviour. Although they have little faith in their own statements, they keep repeating them for a while. Of these, the oft-repeated ones are -- the situation is artificially created, that there is a market syndicate dictating prices, and that rampant hoarding by dishonest traders is causing the crisis. Hence, as a remedy -- as though a ready one -- they prescribe solutions in the form of suggesting surveillance by law enforcers against alleged syndication and hoarding.
That their statements are not baseless and have grown from decades of experience and market wisdom, must not be debated. But the point here is: blame game does not help. Isn't it the responsibility of so many state agencies, including the Competition Commission and the Directorate of Consumer Rights Protection, to monitor the market while also keeping an eye on undesirable situations that might create conditions for market volatility allowing unscrupulous elements to play foul?
Since the past year or so kitchen markets all over the country are wobbly, particularly in respect of the prices of vegetables, cooking oil, and staples. Meat and fish prices have also seen a significant rise. The hike has not only seriously affected the low-income population, but consumers in general. The heat may be less felt by the well-off groups. To contain the situation, the government has decided to fix prices of nine commodities, including rice, atta (whole wheat flour), edible oil, red lentil and sugar. Commerce minister Tipu Munshi last week announced the decision after a meeting with officials of relevant ministries, departments, representatives of law enforcement agencies and business leaders at his ministry. He said the prices of some commodities had increased excessively on the domestic market as traders were taking advantage of the dollar price hike. As for the mechanism through which price setting would be done, the minister said, 'From now on, the Bangladesh Trade and Tariff Commission will assess the international market and it will set reasonable prices of essential commodities on the local market on a regular basis. All the traders would have to comply with the prices, otherwise they will have to face legal action.'
The intent is good, but it may not be the way to achieve the objective. The question here is: has the government equipped the BTTC with the resources -- human and technical -- to deliver what the commerce ministry wants? It remains to be answered how the BTTC will work in the absence of any database on production, consumption, ready stock and so on? Assuming the BTTC after analysing whatever data it could gather set the prices, can that serve as the last word on the unruly market? It is difficult to recall how many times in the past, successive governments had attempted to discipline market prices of essentials through price setting -- with no effective results.
It is true that the government does not have any effective market intervention mechanism. Clearly, market intervention is far more than curbing syndicated ploy in that it allows market forces to operate free from any untoward pressure from any quarter, and for this to happen, the all important issue is to boost supplies. Now who is going to do this? Not the traders. It is here that developing countries in our region and elsewhere rely on state trading agencies to prevail on the unsteady market. In our case what could have been achieved by our lone state trading agency TCB, has not been attended to. Still, it appears to be the last resort of the government. But the fact remains that as a state trading organisation, it was neither groomed nor empowered with the resources to prevail on the market as the successive governments have vainly tried to project it. How many products and in what quantity TCB can procure and store in its warehouse is indeed the key issue. For, it is the sufficient volume of products in TCB's warehouse that can serve as a market stabilising factor.
Given that the TCB is a public sector trading enterprise, there has not been any mechanism in place, so far, to see it emerge as a business entity -- an essential feature it was to assume long back. A quick reference to similar organisations in neighbouring India will reveal the lacunas embedded in TCB's operation mechanism since its very inception. The reason similar agencies there, numbering a dozen, are strong enough to neutralise undesirable price instabilities lies in the basics -- freedom of operation, and financial and professional resources. Although initially provided with endowment funds by the government, they operate entirely on their own income just like private sector business houses, engaged throughout the year in bulk imports and exports, and intervention in domestic market, when necessary.
Going back to the task given to BTTC, it is understandable that what it can do is an academic exercise. Instead of price setting, it would have been far wiser to institute a body with the assignment to come up with findings on market factors fuelling the prices, so that the government could decide its course of action.