Commerce minister Tipu Munshi is the target of criticism inside the parliament and outside, over the spiraling price of essentials. He seems to have become the scapegoat for everything.
In the parliament, the opposition raises questions, but not in a manner that will directly hit the ruling party. They avoid naming names. But on 14 September, a few of the opposition bench members did not spare their commerce minister.
They went as far as recalling that the commerce minister was known as the ‘syndicate champion’, that he was a businessman and understood business well. In reply, the commerce minister said he had entered politics 20 years before he even started business. If he didn’t do business, he would have to live off toll money. And he also pointed out that his business was export oriented.
But the reader needs to go beyond this debate and understand the reasons for the price hike and whether any other ministry or minister is responsible.
Who is responsible for the egg prices?
The commerce minister has nothing to do with the price of eggs and chickens. It is the minister for fisheries and livestock SM Rezaul Karim who is responsible for providing approval for the increase of egg production and import. While the price of eggs has hit an all time high in the country, the fisheries and livestock minister repeatedly says there is no crisis of eggs in the country. Strangely, those are in charge of calculating these matters, are the ones who are responsible for production. So one can only imagine what transpires.
The government has placed a prohibition on the import of eggs, chickens and beef in order to protect the local producers. This gives a chance for the ‘big players’ to rake in profits. The eggs which cost Tk 28 to Tk 30 per hali (four) in 2021, now cost Tk 50 to Tk 55. The broiler chicken that cost Tk 125 to Tk 135, now costs Tk 170 or above. It has even gone up to Tk 250. Beef used to be Tk 550 to Tk 580, and this has increased to Tk 750 per kg. In some places it costs Tk 800 per kg.
Traders had applied to the commerce ministry for permission to import eggs and beef. The commerce ministry consulted the livestock ministry, but the livestock ministry did not respond. The items were not imported and prices did not fall.
Instead the government is looking for ‘syndicates’ carrying out drives in the various markets. But to no avail. Amid all this mud-slinging, an egg producer published a notice in the media, stating that egg production was low and so prices were high.
It is the responsibility of the people’s representative to protect the producers and look after the interests of the consumers. Market analysts often indicate what policy must be followed in this regard. That is, to provide a certain degree of protection while remaining open to imports so that the consumers can purchase produce at affordable prices and the producers can make profit too.
Take, for example, the production cost of any item in Bangladesh is Tk 100 per kg. It would cost Tk 80 if imported. To protect the local production, the import duty would be fixed so that the import costs are higher than the costs of local production. If traders manipulate the market and increase the prices, this creates scope for imports.
This is a common strategy of market control. But by totally halting imports and giving the ‘big players’ the chance to rake in profits, and depriving the low-income people of low-cost protein, whose side has the livestock ministry taken?
The latest reports are that the government has taken a decision to import eggs on a limited scale, that is, 100 million eggs. The question is, why did it take so long? The prices of eggs have been high for around a year now. What is the logic behind fixing the price at Tk 12 per egg, where eggs are sold in the Indian state of West Bengal for half the price?
Oil and sugar
The Bangladesh Trade and Tariff Cell (BTTC) of the commerce ministry regularly reviews the price of edible oil and sugar. The commerce ministry fixes the prices on the basis of their observations. The price fixed for sugar is not being maintained in the market. The commerce ministry and minister are entirely responsible for this.
But there is another angle to the sugar price. The price of this commodity is the highest ever in the global market. In the local market sugar costs Tk 140 to Tk 150. But there are no discussions on the high tariff attached to sugar. The import duty on refined sugar is 67 per cent and on raw sugar 62 per cent.
Trading sources say that the import duty on sugar stands at Tk 40 per kg, and around Tk 22 for soybean oil. The commerce ministry has several times sent letters to the National Board of Revenue (NBR) to reduce this duty. At the start of the year NBR made some concessions on duty for oil and sugar, but this was lifted in May.
The government actually gains if prices of oil and sugar go up in the global market. This increases revenue. The revenue-strapped NBR is not at all interested in any tax concessions. The NBR is an institution under the finance ministry. The finance minister is AHM Mustafa Kamal. Has the finance minister no liability about imposing high import duty on an essential item such as sugar?
Rice and flour
The food ministry controls the rice and flour (atta) market. They try to do so in two ways – 1. By selling at low prices in the open market, and 2. By allowing imports. Rice and flour has remained fixed at a high price. As it was not possible to import at the right time earlier, and duty not be timely reduced, the market price has gone up.
The agriculture ministry is against rice imports, explaining that local production is adequate. There is no need for import. But the reality of the market and the narrative of the traders indicates that there is some discrepancy in the production and demand calculations. Production figures also come in later. Bangladesh Bureau of Statistics (BBS) has still not published on its website the record of rice production in the last Boro season.
It must be kept in mind that in January 2020, the price of coarse rice was Tk 30 to k 35 per kg. That is now Tk 48 to Tk 50 per kg. The fine grain rice which sold at Tk 50, now costs Tk 65 per kg.
Is not the food minister Shadhan Chandra Majumdar, as well as the minister for agriculture Abdur Razzaque and planning minister MA Mannan, also responsible for the high prices due to not taking initiative to import in time, refusing to take this initiative, and also not providing credible production figures in time?
Fuel and electricity
In August 2022 the price of diesel was hiked up by Tk 34 from Tk 80 to Tk 114. The price of kerosene, petrol and octane also went up. Later, in the face of a volley of criticism, the prices were brought down by Tk 5 per litre.
One of the main reasons behind the price hike of commodities is the rise in transportation costs. Transportation costs went up due to the increase in diesel prices. In May the price of diesel shot up and in the same month inflation soared.
The government normally sells diesel and kerosene at subsidised costs. There is no subsidy now. On the contrary, Bangladesh Petroleum Corporation is making a profit. And like oil and sugar, fuel is also a big source of revenue for the government. The finance ministry gets around Tk 30 per litre on the import of diesel.
Production costs of commodities and services have increased with the hike of electricity prices. In January the energy ministry raised the price of gas by 82 per cent. This went up from 150 to 178 per cent in the industrial sector. This pushed up production costs, fanning inflation further. Should not state minister for energy Nasrul Hamid be blamed for this?
Every month the price for domestic fuel or Liquefied Petroleum Gas (LPG) is determined. But this is never followed. Will the Bangladesh Energy Regulatory Commission (BERC) take blame for this?
Dollar rate
The exchange rate of the dollar is now the major reason behind the high cost commodities. The dollar rate which was Tk 86 in May, is now Tk 110. That means 28 per cent is to be paid extra on anything imported due to the dollar rate.
Bangladesh Bank is responsible for controlling the rate of the dollar. The bank adopted an erroneous policy in this regard. While China, India and other countries devaluated their currency against the dollar, Bangladesh held on to the taka rate. This was artificial. The government benefited by being able to show inflated per capita income, per capita GDP, etc. But this encouraged imports and discouraged exports. When the crisis set in, then suddenly the rate began increasing in leaps and bounds. It hasn’t been possible to rein this in as yet and the entire economy has been pitched into a crisis.
Amid austerity, the ceiling to purchase cars is pushed up. New cars are purchased. Unnecessary promotions are given even if there are no posts to fill. But duty on oil and sugar is not reduced
Former finance secretary Fazle Kabir was the last governor of Bangladesh Bank. He was unable to tackle the various scams that afflicted the bank, but even so the government made him governor for a second term. Will the name of the former governor also crop up among those responsible for the spiraling prices?
Who bothers to listen to others?
The commerce ministry is for imports, the livestock ministry against. The food ministry is for imports, the agriculture ministry against. The tariff commission recommends a decrease in duty, NBR opposes. The energy ministry wants concessions on diesel duty, NBR is unwilling to comply.
As this has been the state of affairs for the past year, there was need for integrated decisions, economic leadership. It was seen that this was more or less absent. But when it comes to its own interests, even amid the government’s austerity, it didn’t take them time to increase the ceiling to buy cars from Tk 9.4 million (Tk 94 lakh) to Tk 14.5 million (Tk 1 crore 45 lakh).
Policymakers continue to blame the Russia-Ukraine war for the increase in the prices of essentials. But while prices decrease in the global market, prices do not decrease in the local market. They do not mention that.
A recent survey of the Asia Foundation and BRAC Institute of Governance and Development (BIGD) reveals that 70 per cent of the respondents feel that the country’s economy is going in the wrong direction. And 84 per cent of the respondents said that the cost of essentials had hit their lives extremely hard.
If officials in various capacities in the government do not stand by the people, then their problems are solved later, sometimes not. Only the benefits of these officials and the benefits of those around them are taken care of and that is why amid austerity, the ceiling to purchase cars is pushed up. New cars are purchased. Unnecessary promotions are given even if there are no posts to fill. But duty on oil and sugar is not reduced.
*This report appeared in the print and online edition of Prothom Alo and has been rewritten for the English edition by Ayesha Kabir