‘Market intervention necessary to control black-marketing’

Nepal Republic Media on Sunday held an interaction on current market crisis and its solution. Excerpts: (As told to Kuvera Chalise, Sagar Ghimire and Sujan Dhungana) Retailers not involved in black-marketing Pabitra Man Bajracharya President of Nepal Retailer Association (NRA) The market is witnessing shortage of daily commodities. Also, price of daily commodities has skyrocketed. Many people blame retailers for these malpractices. This is not because of retailers, but big traders from where retailers get supplies. Big traders have increased price of almost everything, citing supply constraints and high transportation charge due to fuel shortage. Also, they have stopped supplying goods to us, asking us to collect goods from their store. It is also one of the reasons behind price hike. About a month ago, wholesalers told us that their stock of edible oil can meet demand of only two days. But we are still getting edible oil from them. This shows that they can manipulate the market if needed. The government, however, is doing nothing to control these activities. We have apprised officials of the Department of Commerce and Supply Management (DoCSM) about price hike and short supply of daily commodities. However, officials of DoCSM, the designated agency to control malpractices in the market, are in no mood to intervene the market. They say the need of the hour is increase supply of goods. I think the government should gradually reduce dependency on other countries. The government should immediately look for alternative to supply food commodities in the market. Tarai unrest and border blockade have to be addressed as soon as possible. The government should also work in close coordination with traders, retailers and other stakeholders to put a collective effort for resolving the ongoing problem. The government should also brief consumers on demand supply situation of food commodities. Government must intervene in the market Madhav Timalsina President of Consumer Rights Investigation Forum Nepali consumers are probably facing the toughest time in their life. Essentials goods have become expensive because of the country’s ongoing situation. Traders have been creating artificial shortage of goods and raising price arbitrarily. As government has been doing nothing to intervene in the market, unscrupulous traders are having a field day. Though fuel stations are shut, petrol is easily available in the black market at Rs 500 per liter. Similarly, LPG gas depots are closed, but LP gas bottlers are selling gas cylinders at as high as Rs 10,000 per cylinder. Government officials say that the country has sufficient food in stock. However, price of lentils, oil, sugar, rice and other food commodities have skyrocketed over the past two months. This shows that the present rise in price of food commodities is not because of supply constraints. Black-marketing is thriving, but the government is doing nothing to control it. Surprisingly, the market monitoring agency of the government is remaining idle. This inactiveness is only increasing confidence of unscrupulous traders. The government should immediately put in place a special mechanism to prevent the situation from deteriorating further and work to ease supply of daily consumer goods. Government should immediately intervene in the market and mobilize public enterprises like Nepal Food Corporation (NFC), Salt Trading Corporation (STC) and National Trading Limited (NTL) to maintain uniformity in price of different goods. Government should monitor the transactions of big traders who have been accused of creating artificial shortage of daily essentials in the market. Likewise, the government should immediately initiate diplomatic channels to ease supply of essential goods. It should also encourage use of electrical appliance to reduce consumption of fossil fuel. The government should keep hydropower sector in priority and encourage development of hydropower accordingly. Fiscal, monetary instruments can’t address current problem Rameshore Khanal Former Finance Secretary We have two supply systems in Nepal. One is led by the government and the other by the private sector. We have seen problem in supply of goods like petroleum products imported by the government, while supply of goods by private sector has seen only some disturbance. The country has adequate food commodities in stock. I think it can meet the demand of at least three months. The problem is that the government officials have not done anything to assure people that everything will be fine soon and that food is not in short supply. Rather, the statements coming from government officials are creating suspicions only. While there is no denying that some traders or firms are increasing price at this time, this is not at an organized level. There is problem also at production level. Except some products, whose raw materials have to be imported, other products like flour and rice should have been easily available in the market. But this is not happening. Though industries, distributors and retailers are facing some problems regarding supply, the situation is not panicking. Shortage of fuel, however, has created some problem in supply. Nepal will not face starvation due to ongoing crisis. As the current problem is not the result of the economic downturn or crisis in Asia or in the world, it cannot be addressed through monetary or fiscal instruments. Political solution is the only instrument to address the current problem. It is the consumers that have been bearing the brunt of crisis that the country has been reeling under for last 20-22 years. There are also opinions that the government should come up with measures of market interventions like fixing the price of the commodities or supplying through its own subsidiaries. However, these measures will fail to resolve the problem if not compound further. The government should regulate the market when there are distortions. Joint monitoring by teams, including representatives from business lobby, consumer rights advocates and other stakeholders, can be the effective way to control anomalies. Sudden raids will only create terror among traders. It can also encourage panicked consumers to resort to hoarding of commodities. There should be a long-term plan to address this type of crisis. Though we have talked a lot over the past many years, we have not been able to diversify our international trade. We do not have strategic infrastructure yet to diversify our international trade. We should develop hydropower projects to meet our energy demand, open international airports in other parts of the country, and open Chinese custom points for trade with other countries, except India. Another important priority should be in increasing our storage capacity. Source: Republica