The second episode of the People's Debate, a panel discussion organised by Economics Study Center and the EMK Center, was held at the EMK Center, Dhaka on February 18 afternoon. The discussed topic was "Soaring prices: Causes and cures of the price hike conundrum".
The debate was moderated by Anirban Bhowmik, country director of Swisscontact Bangladesh. The panel included Md Munir Chowdhury, former director general of the WTO Cell, Ministry of Commerce; Dr Mohammed Helal Uddin, director research of CIRDAP; Khondaker Golam Moazzem, research director of the Centre for Policy Dialogue, and Farzeen Ferdous Alam, chairman of Oggro Ventures.
Tanjim-Ul Islam, president of the Economics Study Centre, in his welcome speech mentioned that vision of ESC is to promote discourse on socio-economic issues. As a very relevant issue in the context of Bangladesh, ESC took the initiative for addressing the price hike crisis and for setting a platform for the students to engage with policy makers, academicians and private sector stakeholders.
ESC is a progressive student organisation of the Department of Economics, University of Dhaka.
Moderator Anirban Bhowmik started by congratulating and thanking ESC for ensuring representation amongst academicians, bureaucrats and private business owners. He said that the set topic is very much relevant to the people of Bangladesh as the effects of price hike are faced by all. It is evident from multiple events of sudden price fluctuation in the country when the commodity market becomes extremely volatile. The impact of such episodes is mostly faced by the low-income group. Bhowmik raised a concern if people are ready to face the next price hike conundrum. He opined that Bangladesh has a huge lacking in readiness.
The moderator opened up the session to the panellists with two questions--first, what causes price volatility in the context of Bangladesh and is there any irresponsibility from the producers' side or the consumers' side; second is how we can be better prepared for future price volatility.
Dr Helal started by differentiating between rise in price level and price fluctuation. He said that the government inflationary policy expects the price level to rise by 32 times of that of 1971. It is a normal case that price will rise with time. Hence, focus needs to be set on price volatility. He said that a very simple logic works behind such volatility: demand from consumers and supply from the producers. It is in the nature of the market that traders will be opportunistic. As a result when supply declines, the opportunity is grabbed by the traders and producers and the prices shot up. Another side can be explored as well when there is enough supply but prices are still high. This happens when a syndicate creates an artificial shock and stops supplying; as a result prices fluctuate once again. It depends on the political idea of the government if it should intervene or not.
Munir Chowndhury said that from the perspective of the government, some external and internal shocks are responsible for price volatility. An internal shock caused a huge disaster in 2007 but no such thing happened in the last 13 years. There are also some external shocks caused by global turbulences like Brexit and the coronavirus. But an important thing needs to be focused on, which is the monitoring capability of the government. Currently it follows a rule of thumb but automation is being done. A decision support system needs to be developed. Although price rise is not a new phenomenon, the government needs to review tariff and credit barriers.
Farzeen Ferdous Alam took the perspective of a producer and talked about the effects faced by the farmers. He said that a change in the consumption behaviour is needed. Although it is an alarming issue that there is a huge price hike problem in the retailer level, farmers get a very low price. They do not have any profit margin. To farmers, price hike or fluctuation is only an artificial issue. He emphasised the welfare of the farmers and urged the government so that they get a profit margin. Alam also warned regarding the next staple good crisis which he predicted will be in the rice market because the farmers are switching from rice to other profitable crops.
Moazzem focused on the consumer behaviour pattern. He explained that people assume that the consumers have all the market information and then react to them. But in reality not only the consumers but also the government does not have adequate information about the market. Hence, the consumers behave irrationally very frequently. Moazzem took a different perspective and talked about how the production cost has gone up due to labour price rise. To reduce labour price, he stressed automation.
The event was wrapped up by taking a few questions from the audience.
The ESC and the EMK Center previously organised People's Debate: Episode 1 and the topic was 'The unemployment epidemic of the university graduates'.
The writer is a third year student of the Department of Economics, University of Dhaka.
He can be reached at [email protected]
