Weak government to blame for price hike
KATHMANDU, SEP 8:
Economists, consumer activists and top government officials have blamed the weak government and inefficient free market economy for the price hike. Food prices have been rising because of the incompetent government and private sector and not due to market principles, they said, commenting on the current price hike.
The nexus between stockists and wholesalers is responsible for increasing food prices, said secretary of Ministry of Commerce and Supplies Lalmani Joshi. “We have surplus cereals, but there is a shortage in the market. There is monopoly in the market,” he said. The price hike is due to cartelling and hoarding, he added.
The country had a food surplus of 886,307 metric tonnes in 2011-12, producing 60.37 million metric tonnes of cereal crops. Rice, wheat, maize and pulses recorded bumper production last year. However, there was a shortfall of 71,916 metric tonnes and 68,627 metric tonnes of edible oil and sugar respectively.
The current price hike is because of the irresponsible private sector, said director general of Department of Commerce and Supply Management Narayan Prasad Bidari. “We adopted a free market economy believing that the market would itself develop competition but the private sector is headed towards syndicate, cartelling and hoarding,” he said, adding that the government must be proactive regarding essential goods. Therefore, the department is mulling maximum retail price of eight essential food items including rice, wheat flour, maize, pulses, edible oils and sugar. “It is essential to control the price hike and there is no other option,” he said.
However, economist Dr Chiranjivi Nepal doubted whether the provision of maximum retail price could be implemented. “It is difficult to implement it because the government does not have a baseline to calculate the price,” he said. According to him, the government does
not have a price calculating mechanism for agriculture crops except sugarcane.
He suggested the government to intervene in the market by supplying food items whose prices have skyrocketed at a lower price. “If the government is able to do this then prices will automatically reduce,” he added.
However, the government is facing difficulties in starting the market intervention approach because of the shortage of food items at state entities. Nepal Food Corporation has
a stock of 3,600 metric tonnes of rice, which is barely enough for four days for Kathmandu valley.
Similarly, sugar stock at Salt Trading Corporation and National Trading Corporation is sufficient for less than one month. The monthly demand for sugar in the country is about 22,885 metric tonnes. The country has also been facing a shortage 71,916 metric tonnes of edible oils in the current fiscal year. Consumer rights activist Jyoti Baniya, believes that the weak government is the root cause of the artificial price hike. “The current political situation is extremely instable, so business people have been engaging in black marketing and the government must act to protect consumers,” he said. Declaring the maximum retail price of essential goods is the need of the hour, he added.
He also suggested the government to strengthen market monitoring and intervene in the market during festivals. The government must open subsidised markets across the country before Dashain and Tihar, he added.
Source: THT
