Ramadan price rise
In a market economy, where it cannot simply mandate a maximum retail price for products, there are limits to what the government can do to address the issue of price rise of essentials. Nevertheless, through regulation, incentives, and ensuring that the law is followed, there is still plenty that a government can do to rein in runaway prices.
In the context of Bangladesh, the principal problem stems from the fact that some 70- 80 per cent of essentials are still imported and this import dependence, not only makes the country vulnerable to price rises in the global market, but also creates opportunity for collusive and monopolistic practices among unscrupulous syndicates of importers.
The solution here is to create an environment conducive for new players, a new generation of importers to enter the market and correct the inefficiency. If the import barriers to entry are eased and not the sole possession of a relative handful of powerful actors, we should see more price competition for imported goods.
Similarly, when it comes to the differential between wholesale and retail price of domestically produced goods, the solutions are to break the monopoly of the existing syndicates and interfering rings of middlemen through dispersal of marketing centres whereby the growers and consumers will be brought into a more direct relationship. The government can do a lot to diversify the supply chain, ease the entry of new retailers and to ensure that they are not shut out.
Finally, with Ramadan upon us, the government needs to expand programs such as TCB operation and OMS, which though they will have no impact on the aggregate price of goods, are nevertheless necessary as they provide relief for those at the bottom of the economic scale.
Even in a market economy there is much that a government can do to ensure that the market mechanism works to deliver essentials to people at an affordable price. Where there is inefficiency in the market, there is opportunity for correction.
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