Keep essentials’ prices stable

Essential commodity prices should be controlled to keep it at a tolerable level while rising inflation contained as people are still struggling to overcome the economic shock brought on by the pandemic, said economists yesterday.

"In macroeconomics perspective, if one indicator is to get the most importance, that is inflation. Essential commodity inflation is higher than the rate measured by the government," said Debapriya Bhattacharya, convenor of the Citizen's Platform for SDGs, Bangladesh.

"The prices of essential commodities that determine the living standards of the working class should be controlled and kept moderate," he said.

He was addressing the closing session of a two-day conference titled "Bangladesh emerging from the pandemic: coping experiences and policy choices", organised by the Centre for Policy Dialogue (CPD).

The government should continue providing assistance to people affected by the pandemic even when the health risks starts receding, said Bhattacharya.

"The economic implications of the pandemic will last longer than the health crisis. The economic implication will be with us for a longer period of time," he said.

For example, if the health crisis continues for two months, its economic impact will last for over four months, he said.

"So, there should be a continuation of Covid-19 related support measures in view of the depth of the impact," he said.

Bhattacharya, who is also a distinguished fellow of the CPD, presented a paper titled, "The Covid consensus: Bangladesh's experiences in dealing with the pandemic".

He said priority should be given to targeted cash transfers for eligible beneficiaries while the protection of marginalised groups from the rising prices of essential commodities should be also ensured.

He also recommended allocations in the public expenditure basket and effective spending for health, education and social protection.

"We should monitor debt sustainability concerns as we are taking loans from different sources including China," said Bhattacharya.

"We have to learn the lesson from the experience of Sri Lanka, which fell into the middle-income trap and debt trap after graduating to middle-income status," he said.

The SDGs commitment of "Leave No One Behind" should be implemented in all policies while SDG delivery refocused on poor, decent jobs, rising inequality and quality education, he said.

"The biggest achievement of Bangladesh in 50 years is graduating to middle-income status and the biggest setback is the increase of inequality between rich and poor," he said.

Economist Zahid Hussain said although demand contributed to the rising inflation, another reason for it was cost push inflation, which occurs when overall prices increase (inflation) due to increases in the cost of wages and raw materials.

"After a hasty decision for increasing the price of diesel following a spike in the international market, questions have been raised over the policy we are following to set energy prices," he said.

"First it was like we wouldn't increase the price, despite the hike in the international market. Then it seemed we wouldn't decrease price, despite the fall in the international market," he said.

"If the price is not set in a transparent and logical way, confusion will arise and inflation would shoot up," he said.

"The lesson of the Covid-19 is the importance of vulnerability. Besides, our resilience is overestimated. If a family can sustain taking two meals a day instead of three meals, it's not resilience, it is helplessness," he added.

Rounaq Jahan, a distinguished fellow of the CPD, saidresearchers and think tanks should work on how to implement the no-one-left-behind policy and what instrument to use to hold policymakers accountable.

In the policy documents, it is easy to write about women's development but it is not being implemented, she said.

"So now we have to think -- how do you make policymakers accountable," she said.

Women faced special vulnerability due to the pandemic, such as the burden of inequality in income and employment alongside early marriages and violence, she said.

Eminent economist Wahiduddin Mahmud said people who were just above the poverty line have always remained at risk of falling into poverty and due to Covid-19, it has been accelerated.

To safeguard them from falling into poverty, they should be extended opportunities enabling savings, he said.

He said a big economic loss of the country due to Covid-19 was that many small entrepreneurs saw their business disappear.

Rehman Sobhan, chairman of the CPD, said there has been persistence in the increased deprivation of a significant segment of the population during the pandemic.

"What is still not entirely clear…the government itself has not explored this…there have been considerable deficiencies both in the commitment of resources and in the utilisation of policy tools," he said.

Deliveries under certain interventions, be it food or income support, appeared to have some impact but no significant and noticeable effect that all has turned for the better, he added.