Chaining the ghost of price hike

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Dr. Rashid Askari

         A sharp rise in prices of essentials is a perennial problem we are faced with. This is nagging the middle and low income people nine times out of ten. But the present state of price-hike crisis is alarming (2007).

It has meanwhile broken almost all records. The mad horse of price-hike is terribly trading on public toes. It seems to be crossing danger limit. The gravity of the whole situation can precisely be substantiated by the dreadfully risen price of rice. In this time of full rice harvest while price of rice is supposed to have a steep fall, it is rather shooting up. People of hand-to-mouth existence have been the worst sufferers. The golden days of people who once lived on rice and milk have been devoured by the ghost of price-hike. The ghost has turned the 'rice and fish-loving people' into 'rice and lentil-taking people' and the latter ones into starving folks. It has cast its spell not only on rice and lentil but also on all edibles. Things of everyday wear can be somehow adjusted, but things edible are things we can hardly go without. So we have got entangled in the vicious circle of price-hike.

      The problem of price- hike becomes more intense, and is felt seriously for an obvious reason. After the departure of the Alliance Government (2001-2006) in general, and after the power assumption of the Army-backed Caretaker Government in particular, the problems of price hike were expected to be over and done with. But contrary to people's expectations, the Caretaker Government has virtually failed to keep a curb on the unbridled price-hike of the essentials, may be, against their better judgment. But what we have seen is that all Government efforts taken so far in this regard have proved unavailing.

     So far we were putting the blame for price hike on the Alliance Government, on the syndicates which were allegedly playing the market. They were accused of pricing things out of the market, and making people buy them under compulsion. The indulgent Alliance Government is no longer existent, nor should be their pampered syndicates. Had syndication been the prime cause for price hike, the price by now should have come down at least to a tolerable level. But the situation is the inverse. So, we should not fix our eyes only on the so-called 'market syndicate' to locate the root cause of price hike. There are more things to go about.

How is the price of things set?

   Economists say that the price of things is determined by the demand of the buyers and the supply of goods/commodities. If the supply is low and demand is high, the price would be high and vice versa. There are of course, a few exceptions to this. But the prices of things in these days do not seem to be subject to these rules and their exceptions. So, the exploration of the ways of pricing may hint at the crux of the price-hike problem. Although there has been some crop failure in recent time due to the fertilizer crisis, it is not the solitary cause of price hike.

      The interference of the middlemen in the market should be more responsible for price hike. This has become an inevitable factor in marketing a product. There is a long chain of middlemen working between the grower/producer and the consumer. So, the price of a product keeps increasing at every step of the middlemen’s' interference. Both the growers and the consumers are held hostage by the middleman. And since they are unscrupulously interested in a quick profit, they go on causing huge price hike. They buy things directly form the growers at the lowest price and sell them at the highest, and thereby pocket the difference. To this has been added the rise of the price of engine oil which has added fuel to the flames. So, much as the Government would take steps to put a bridle on the mad horse of price hike, it is not plummeting even to an occasional low.

      Is it then an incurable malady? Definitely not. Maybe it is a hard nut, but it is not impossible to crack. The tough image of the Caretaker Government may fade away if they fail to deal with this problem in right earnest. Opening up of some Government-run market is not enough to resolve the long-standing crisis. The Government should work out an effectual strategy with regard to this. They should take a tough line with the 'market syndicate' men and others who work as an obstacle to the smooth functioning of the market. Stiffer action should be taken to stop the middlemen's interference in the market.

       The gap between the grower and the consumer should be narrowed down considerably by way of increasing the number of markets. The markets should be monitored strictly. The evicted hawkers are hawking goods from place to place quite untidily. They usually charge high prices. To avoid this, there should be a well organized market management system. The Government should also put a stop to all sorts of price-fixing. The practice of fixing prices by agreement between syndicates and middlemen keeps prices artificially high. This should be properly looked into. Moreover, the policy-makers and the law-enforcers should make sure that a pretty uniform list of current prices for goods on sale is maintained. 

Above all, the Government should adopt a fresh policy on prices. This may be called the 'National Price Policy'. The nuts and bolts of the policy should be determined by experts, and built on economic pragmatism. It has become an imperative to plan out this price policy and include it in the National Budget. An immediate implementation of this policy may help us get rid of the spectre of price hike; otherwise, the ghost would keep haunting us, and the malady remains incurable. Surely we do not want that.

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