Unstable market keeps impacting economic growth

Published: 00:00, Feb 24,2020

 
 

GOODS price instability has left a negative impact on the economy, financial resources and income distribution that may lead to an increase in poverty instead of alleviation. In October 2019, the World Bank poverty assessment report projected that more than a half of the people were vulnerable to poverty as their consumptions were close to the poverty threshold. In 2019, onions prices fluctuated at least 24 times when consumers lost Tk 3,179,365,000, as the Conscious Consumers Society says. Prices of other kitchen items have also remained unstable. Another round of increase in power and water tariff has been in conversation. The cost of living in Dhaka went up by 6.5 per cent in 2019 because of increase in prices of goods and services. Instead of ensuring price stability, the government has cut down on the interest rate on postal savings by a half without considering the impact on low-income people who depend on postal savings schemes. Economic struggle of low- and middle-income group, therefore, stands in contrast with the government’s narrative of economic growth and success.

Commerce ministry officials have talked about the imposition of minimum export prices on onions by India in September 2019 and the recent outbreak of COVID-19 infection as factors for price volatility. However, the Consumers Association of Bangladesh rejects the claim, saying that onions and garlic available on the market were imported and stocked long before the outbreak. They say that it is because of unscrupulous traders and the government’s weak enforcement of anti-hoarding law that the market has become so unstable. Consumer rights activists criticise the government for financially burdening everyday consumers with its flawed planning such as the idle rental power plants for which the government paid Tk 8,000 crore in ‘capacity charge’. Similarly, the Dhaka Water Supply and Sewerage Authority has proposed an increase in supply water prices by 80 per cent to repay loans taken for the implementation and maintenance of development projects. Transparency International, Bangladesh has termed the proposal unjust and has asked the authorities to stop corruption and to improve efficiency before making people pay for what they do not receive. The rising living cost appears to be a case of short-sighted planning, weak market regulation and corruption in the public sector that the government has so far allowed.

A stable market is considered a fundamental requisite to stable economic growth, but the government has remained shockingly non-committal towards an effective market regulation. It is time that the government took steps to control the goods prices and took action against the syndicates responsible for market instability. The government must also revisit its development policy such as power plants and water supply projects to ensure that they do not become a burden on people at large.

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