The state trading body the Trading Corporation of Bangladesh (TCB) has started selling essentials from the third week of April-a long-practised exercise meant to 'stabilise market prices' ahead of the month of Ramadan. The items that are mostly in high demand during the month of fasting - onion, edible oil, sugar, lentil, dates etc - are sold at subsidised prices to consumers. This is a regular annual phenomenon, and as the ritual goes, the TCB every year appoints thousands of dealers to procure products from its go-downs for sale at different parts of the country at prices set by the TCB. Besides the dealers, the TCB also runs its own outlets in the capital and divisional headquarters.
No wonder, because of the price spiral before the advent of Ramadan, the TCB figures regularly in the media--for the wrong reasons. It seems, ironically though, that there is a correlation between the TCB's open sale of the aforementioned items and the shooting up of market prices. In other words, what is being deemed as market intervention serves to fuel the price surge. Or, one may say, the plan to intervene the market is so ill-conceived and botched up that it is no more than a month-long routine exercise with virtually no strength inherent in its methods to tame the market.
More than a month ahead of Ramadan, grocery items including onion, garlic, sugar and chickpea as well as vegetables are selling at higher prices at kitchen markets across the country. Prices of meat have also shot up. There is apparently no dearth of supply, according to the government as well as traders. Still, as the routine would have it, prices go up. This, in other words, goes to suggest the failure of market forces in playing their role in governing market behaviour during the holy month as they remain muted by a stronger albeit informal market force called market syndication.
Now, if this is taken for sure as too strong an influence, then there are questions as to the legitimacy of the state trading agency, TCB. The key feature that charaterises a state trading body is its market intervening role.
In this context, it must be noted that there is no reason to confine the role of the TCB in the month of Ramadan alone. The important issue that should be looked into is whether the government wants it to function as a strong, capable market restraining force. As a state trading body, this should be the TCB's principal objective, but the reality is that it is not at all equipped with the capacity to bring some semblance of stability in market prices by way of its seasonal interventions. As a state trading organisation, it was neither groomed nor empowered with the resources and freedom to prevail on the market as the successive governments have vainly tried to project it.
Given that the TCB is a public sector enterprise, there has not been any mechanism in place so far to see it emerge as a business entity-an essential character it was to assume long back. A quick reference to similar organisations in neighbouring India will reveal the lacunas embedded in TCB's operations since its very inception. The reason similar agencies there, numbering in all a dozen, are strong enough to neutralise undesirable price instabilities lies in the basics-freedom of operation, and financial and professional resources. Although initially provided with endowment funds by the government, they operate entirely on their own income just like a private sector business house, engaged throughout the year in bulk imports and exports, and intervention of the market, when necessary. To provide the much required dynamism to the operational challenges, the CEOs of these agencies often come from the private sector.
With the month of Ramadan ahead, the usual rhetoric has surfaced once again, namely arming the TCB with monetary and legal facilities to put a tab on the price hike of essentials. Understandably, the government has barely any choice but to extol the virtues of its lone instrument in a bid to assuage the perils of price hike.
The key issue is the strength to effect successful market intervention by the state trading body. Strength does not come from the word of mouth. It has to be innate in a well planned and calculated process. The very capacity to do so calls for strong legal, institutional and financial backups. Market syndicates will obviously be the big rivals and breaking the oligopoly and monopoly of organised market syndicates will require the TCB to be a thoroughly professional one in the first place. In this, allowing it to function independently is a prerequisite.
No doubt, the month of Ramadan is a test case of the TCB's attempt to curb untoward market behaviour and its eventual failure to do so. We see this happen every year, and it is the built-in constraints of TCB that stand in the way of its success. Experts are of the opinion that with competent manpower and a sizable endowment fund added to its existing financial resources, it can be expected to operate in small-to-medium scale trading round the year, and intervene in the market when necessary.
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