Bangladesh’s economy is characterized by a market economy where decisions regarding investment, production, distribution and consumption are based on supply and demand – apparently! In this system, prices of goods and services are mostly determined in a free price system; but in reality, very few powerful players, who are the supreme decision makers in production and consumption, mainly control everything thus also the economy of Bangladesh.
Here, the hypothetical laissez-faire and free market variants do not work at all. In recent times, the price crisis in the potato market gave very good evidence of market monopolizing in Bangladesh, where marginalized farmers have to count 4/5 taka loss per kilogram of potato.
In the retail market per kilogram potato is sold at 15/20 taka. Here, market price is not determined by the demand and supply function rather few powerful businessmen control the price of goods and services by illegal syndicate. This syndicate is so powerful that government cannot do anything over the given price.
Farmers are left with nothing to do except to sell their goods below their production cost or just to store till overload that eventually gets rotten. Consequently farmers are exploited because of market monopolizing.
Government does not have even minimum intervention over this market monopoly and as a result prices of the goods and services jump up without any logical reason. Once the price of any commodity raises it never falls regardless of the world price.
Market monopolizing and eventually rising trend of price levels in Bangladesh is a key challenge for the country to continue the current pace of socio-economic development ensuring a greater stake for the poor and limited income people since price hikes of essentials is constantly creating serious trouble for larger and larger numbers of the poor population, in particular hit, besides the vast majority of lower-class and middle-class groups with limited incomes in general.
In this situation, prices of essential commodities exceed the limit of the poor income group and fixed earners while the food prices of urban areas continued to lift at an accelerating rate compared to the food prices of rural areas.
It is really a threat for a developing country like Bangladesh. Shortfall and volatility in commodity production, relative price of fuel, electricity etc., consumption patterns, trade policy, financial market, syndicates and hoarding are mainly responsible to make the price of essential commodities sky rocket.
Especially for the poorest segment of our country and the limited earners, these are hit hard by the ever quickening movement of price of essential commodities. To adapt to this challenge, they have to give up some important items for continuing a minimum standard of living like education, nutrition etc. and children and women are mostly affected more than others.
This rising trend of prices decreases the real income by reducing purchasing power of the poor and people with limited incomes; while there are only a handful people who take benefit by extracting huge profits at the cost of the sufferings for millions of poor people. Price hikes have other indirect impacts on the economy. Increased prices of a goods reduces purchasing capacity of people and decreases the quantity demanded of that particular set of goods which also affects production negatively.
Besides its impact on economy, price hikes of essential food items has unbearable consequences on the lives of millions of poor people such that exacerbate the real situation of poverty and thereby deteriorating the long-term prospects of development.
No government regime or its various regulatory bodies have so far been able to exert any sort of effective influence over this market monopoly either by introducing policy or enforcing regulation to control the skyrocketing trend of prices of essential goods and commodities in Bangladesh.
The failure of existing measures to fight price hikes may have been because of several reasons which are worth looking at for effective policy control and enforcement. Further, this implies that, perhaps, there is a considerable lack of systematic understanding of how the total mechanism of price hikes work, starting from farmers’ production fields to finally the retail shops in the markets where consumers have no choice other than to take the price for granted!
This rising trend in the price of essential food commodities has a major impact on food security particularly on the marginalized section of the society in Bangladesh. Recent rises in domestic cost of the production of food, together with high prices in the international market may boost further food inflation, leaving even more adverse effects on the poor.
Most of the poor spend more than half their income on food. Price hikes for essential commodities can force them to cut back on the quantity or quality of their food as well as change their consumption patterns. This may result in food insecurity and malnutrition, with adverse implications in both short and long term.
Such price hikes might not only make the lives of the poor miserable but also could drag down a number of people below the poverty line.
Monopolizing the economy of Bangladesh is not a recent phenomenon, but the problem is acute for the recent years. This problem is really challenging for the country to continue the current pace of socio-economic development ensuring a greater stake for poor and limited income people. It is high time government made proper intervention in the market to stop the jump up of price of essentials for the survival of the lower and middle-income people.
Bangladesh is a developing country where inequality is very high, so if the price level grows then the inequality will increase further. Though the growth rate is increasing every year while the value of the Gini-coefficient* is not decreasing. Proper intervention and an understanding of the market structure by the government authority can ensure a balanced development. Then, Purchasing Power Parity (PPP) and Gross National Income (GNI) of the people will be increased and then development will be meaningful for every segment of the country.
*The Gini coefficient (Gini index or Gini ratio) is a measure of statistical dispersion intended to represent the income distribution of a nation’s residents. It was developed by the Italian statistician and sociologist Corrado Gini.
