Resume The Routine Work

To know inflation, introduce producer price index, Resume routine work to ease the situation complex.

Bangladesh's inflation woes continue. Yet the govt is optimistic to contain the situation quickly. Meanwhile, flash flood caused by unusual rainfall is identified as one of the factors disrupting the supply chain. Poultry is hit by the flood to a great extent. At the same time, allegations of foul play in this particular sector are strong. Government allowed to import 40 million eggs from India to stabilize the egg market, which registered an unusual price of Taka 180/dozen. Consumers' protection body resumed their operation, identifying and catching red-handed few malpractitioners.

While government focuses on reforms( which are still being worked out) and election, routine functioning of a democratic govt is still missing. In my previous piece, I highlighted the role of regulatory bodies like BTRC,Competition Commission, BERC etc. Holding regular hearing and addressing pressing concerns, they somehow hold back malpractices in industry. A kind of check and balance. Similarly, parliament and parliamentary committee hold discussions and audition on key issues and call concerned persons / bodies to furnish their explanation. This particular form of check and balance is missing here. Because we are never allowed to practice it in the right way. So this interim govt could take a lead and initiate a subcommittee under the auspices of each ministry to hold hearing on pressing issues and offer solutions. It will lessen the workload of advisors. These subcommittees will keep a close tab on issues like price hike,law & order deterioration etc.

The issue of price hike is generating smoke. Two months passed since this govt took office, yet there is no improvement. Extortion, particularly political extortion is blamed for the rise in price level. Extortion to some extent is subdued ,yet price level is still rising. Here we focus too much on consumer price index, which mainly deals with prices at the retail level in cities. And selection of goods in calculation of CPI is highly questionable. But Producer Price Index(PPI) is often ignored. PPI focuses mainly on prices of ingredients needed to make final good. Price levels of ingredients, equipments should be monitored. Calculation of both PPI and CPI would reveal whether there is any distortion in the supply side. A corresponding change in CPI may be interpreted as price increase due to rise in price of raw-materials. If the change in CPI is larger than that of PPI,it may be concluded that some other factors are influencing prices in the distribution process. Allowing multiple parties to calculate both PPI and CPI would at least align the official data with the market data.

Idea of introducing license for wholesalers in the kitchen market was recently mooted. So that people with malevolent intentions stay away from kitchen market. I think registration with TIN and BIN in the wholesale market to a great extent curb market manipulation and stem entry of opaque capital in the market. But license/ registration process should be easy and flexible otherwise it will work as entry barrier and encourage black market for selling license like rickshaw license in Dhaka.

Chinese currency recently appreciated against the USD. It is good news for our exporters as Bangladeshi goods will be more competitive in the international market. China will relocate part of its manufacturing units abroad in the wake of rising cost at home.

Easing inflation and restoring law & order now depend on how the govt resumes the routine functioning and check and balance mechanism.