Editorial, NewAge, October 12, 2007. Dhaka, Bangladesh
It is not surprising that a visiting delegation of the Asian Development Bank has advised the military-driven interim government to review and presumably increase the prices of fuel, gas and fertiliser which the government subsidises. The recommendations, as reported in the media, came in order to prevent further crisis in the economy. The multilateral lending agencies typically recommend measures that stem from their proclaimed belief in open market economy although scores of countries, and even those who provide these agencies with most of their funds, historically followed a strictly governed economic model on their path to development and economic prosperity.
That the finance adviser to the interim government, Mirza Azizul Islam, shares the same views, however, is quite alarming. He cited maintenance of fiscal discipline as a reason to increase prices of certain commodities that are subsidised by the government. One should keep in mind that it is for the sake of this fiscal discipline that the International Monetary Fund previously recommended against wage increases of primary school teachers in Bangladesh. The economy is currently reeling from the shock of two bouts of flooding that have wreaked havoc on crops in general and the aman harvest in particular. Small and marginal farmers are already finding it rather hard to make ends meet given the high prices of essential food items. In such circumstances, the government, especially considering that it is the government of a third world country where a fourth of the population is hardcore poor, should stand by the people and support them, and to ensure that the economy is revived in the shortest time possible. One of the most potent avenues to make that happen would be continued subsidisation of such essential commodities as fuel and fertiliser since both are crucial agricultural inputs.
We have said before and we say it again that the government must not view all its activities from a strict commercial point of view, which, needless to say, is more befitting a corporation and one that the lending agencies propagate. The incumbents must consider their decisions from the extent of public welfare those decisions would bring about. At the moment the economy to a large extent would depend on the vibrancy of the agricultural economy which happens to be the main driver of the domestic economy. In view of the fact that domestic as well as foreign investment is on the decline, which invariably implies low employment generation, the government must provide generous support to the agricultural sector through subsidising its inputs. Increasing the prices of these inputs would have an adverse impact not only on agriculture but the entire population since it would certainly raise the prices of essential commodities even further and thus increase the already high cost of living.