Strengthen OMS to support poor in high inflation

Prices of daily commodities, including rice, are on an unusual hike. A few mill owners are controlling the rice market. The market is also going under the occupation of corporate brands, which ultimately creates pressure on consumers.

To effectively regulate the essential commodity market, the government can go for a contract farming system under which it can buy paddy from farmers directly and get it processed at mills.

If the government can take at least 25% of the produced crop directly from the farmers, corporate firms or mills can no longer create instability in the market.

The prices of many food and non-food commodities which abnormally surged over the last year show no sign of returns to previous levels. The earnings of people, however, did not increase in a similar fashion. Moreover, real earnings dropped significantly due to higher inflation.

The Bangladesh Bureau of Statistics data says last year's inflation hit a record high since 2011, adding to the misery of millions of low and middle-income families. According to the Consumers Association of Bangladesh report on Dhaka metropolitan inflation, the cost of living in the capital increased by 11.08% in the year, which forced the poor to reduce their living standards.

Infograph: TBS

The inflation rate was 6.88% in 2020, 6.50% in 2019, and 6% in 2018.

It should not be expected that the soaring prices will come down. It will not happen for sure. We cannot go back to the era of Shaista Khan. Therefore, special attention is needed to increase people's income. Employment generation should be prioritised to this end. The rate of increasing earnings should be higher than that of inflation so that low-income groups can lead a quality life and have nutritious meals. Undoubtedly, the best aid is to create new jobs.

We also recommend that the OMS (open market sales) programmes of the government be strengthened further to support poor people at least at the time of high inflation. Currently, many of those standing in the queues of OMS and TCB outlets return home empty-handed.

It is also necessary to help people who become helpless under the pressure of rising costs by supplying food and non-food basic commodities. Cash transfer programmes should be extended to the disadvantaged group. Cash support can be in exchange for work also.

Since the urban population faces more pressure and vulnerability due to inflation than the rural population, special social safety programmes should be taken for the lower-income urban people.

Fuel products, especially diesel, should be subsidised again as their prices determine the cost of everything – from irrigation to production to transportation.

Apart from this, monitoring should be increased to maintain stability in markets. Strict action should be taken against syndicates and unscrupulous people. The Directorate of National Consumer Rights Protection, the Bangladesh Competition Commission, the Ministry of Commerce, The Consumers Association of Bangladesh, and the media should work together for good governance in markets.

The country saw visible development in the last decade. The number of poor people decreased. Yet, about 4 crore people are living below the poverty line. So inflation remains a serious concern.

The year 2022 was not relaxing. Not only Bangladesh but also the entire world faced the same fate – the fallouts of Covid-19 and the impacts of the Russia-Ukraine war.

The Covid-19 pandemic significantly decreased the income of people, particularly from the low and middle classes. It cannot be denied. Yet, we see a rise in our per capita income. It might be based on upper-class income. The inequality in the income of lower and higher classes has negatively affected our overall economy. As inequality has been on the rise, the government must address it. Otherwise, the economic crisis will deepen further.

The author is the president of the Consumers Association of Bangladesh (CAB)