Mafia-controlled food market jacks up essential commodity prices

With due consideration to the current cost of living and difficulties associated with COVID-19, the government has removed import duties on essential commodities and fixed a maximum price on food items such as dhal, canned fish, onions and sugar.

The government's intention was to reduce the price of canned fish (large) to Rs. 200, a kilo of B/onions to Rs. 100, a kilo of sugar to Rs. 85 and a kilo of dhal at Rs. 150.

The present regime has set ceiling prices for several items, but nowhere in the market could those items be bought at the fixed price. Even government retail outlets like Sathosa seem to have adopted indirect means of profiteering.

Economic management under COVID-19 has created lucrative opportunities for profiteering by households under the unscrupulous traders and businessmen.  

In the meantime, even the Central Bank, which expressed its concern about food-driven inflation but believes that the impact is limited, doesn’t want to talk about the need to remove domestic market imperfections

A mafia-controlled food market is a recipe for popular unrest especially when the new wave of the deadly virus is being mishandled by the Ministry of Health and is threatening the life and livelihood of the affected people hard hit by the impact of loss of employment.

It will be interesting to watch how the price of turmeric would swing when locally harvested products come to the market during the early months of 2021.

Market imperfections must be removed without considering its political benefits. Militarisation of administration is no solution to economic misery, economic analyst said.  

Controlled prices can also lead to shortages, as producers lose incentive and ability to stock these products, economic think tank Advocata Institute said.

In addition, when imposed with no prior warning, price controls force smaller businesses to take losses, which can sometimes be inequitable, they pointed out.

Despite the good intentions behind this decision, it has the potential to make the situation worse.