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People may not have expected the power situation to improve overnight; however, they did not expect it to deteriorate so drastically in such a short period of time, either. While neither the Bangladesh Nationalist Party-led government nor the military-controlled interim regime did much to increase generation of electricity during their tenures, the rate of power outage and load shedding then was not as frequent as it is this summer. The continued dry spell and the scorching heat are decidedly not making things any easier for the government of the day. What is rather baffling is that within the span of just one year, the demand for electricity has risen so much that it is impossible to keep power outages at an acceptable level. The sporadic demonstrations and rampage by enraged citizens are bound to become more frequent if the current situation prevails.
   On the other hand, there have been few indications that the plans to increase power generation are taking concrete shape satisfactorily. Whatever has been reported in the newspapers suggest to the contrary, although it remains an electoral pledge of the current government to add 5,000 megawatts of electricity by the end of its current term. It was apparent from the efforts of the two previous regimes that the government bids to float tenders for setting up power plants were mired in irregularities and even when those tender bids were cancelled and fresh tenders called, the process was riddled with complications. The current government will hopefully be able to rid those problems and go ahead with awarding tenders to private operators properly.
   Power is increasingly becoming a necessity for the people to gradually move towards a higher standard of living. With reliable power supply, household expenditure on energy, which constitutes up to a fifth of rural household income, will be substantially reduced. Aside from the economic benefit increased electricity availability would allow a large number of the rural population with potentially more productive time. Electricity would also contribute positively to the quality of health services, not to mention water services in the cities. One of the main costs of agricultural production, diesel-run irrigation, is at least three times higher than power-run irrigation. And finally, industrial establishments will certainly gain substantially from uninterrupted power supply. The qualitative change that electricity supply could bring about may not be obvious in economic terms in the immediate future but it would certainly have substantial impact in later years.
   This government should immediately engage itself and initiate power generation in the public sector without hindering the private players from operating. The public sector power generation could well target the excluded groups and supply them with electricity since electricity distribution is subsidised by the government any way. Moreover, this would allow the government a little more leverage as it very dependent on private power generation.

Upswing in crimes

THERE has been an evident downslide in law and order over the last one month or so. At no time during the successive regimes of the past did the crime curve show any tolerable trend but there are periods when it shoots steeply upwards. Murders, robberies, hijackings, extortion and muggings are all on the rise. The capital city is as vulnerable as any other part of the country, if not more so. Theft of car is another crime that is increasing. In some areas muggers rule the lanes and by-lanes after dark.
   The Dhaka Metropolitan Police commissioner has expressed concern at this surge in crimes in the city. According to DMP sources, the number of murders has doubled over a period of one month. In February, 16 persons were murdered in the capital; the number climbed to 34 in March. It is learnt that the police are updating the list of thugs and planning a massive campaign to nab them. However, such campaigns were launched in the past and the consequence was in many instances distressing. The police resorted to mass arrest nabbing any one who happened to cross their path and the victims were required to win their freedom through illegal gratification. We trust this will not be repeated. But even in selective arrests the possibility of harassment remains.
   It should be noted that crime control is largely dependent on internal reforms of the police. Police reform has been on the air for quite sometime but how much reform has been implemented and what is the outcome is anybody’s guess. Another key factor is the independence of the police. In the past the police were used for political ends; it is difficult to say whether this is changing at present. Police retraining becomes difficult considering that wholesome recruitment in lower ranks was made on political consideration and a large segment of the recruits are former cadres of different political parties. At any rate, the test of the pudding is in the eating – a decline in crimes will be the measure of any success in police drive. Accountability of policepersons has to be rigidly enforced.
   Another concomitant factor of crime and thuggery is drugs. Many hardened criminals are usually drug abusers and in many cases, they engage in crime in order to finance their addiction. Hence, we feel that the fight against drugs needs more vigour and the government should allocate more resources to this.

WITH limited resources, the government’s recently announced stimulus package was bound to disappoint some quarters. The money, a little over Tk 3,425 crore, could only go so far. And towards that end it only appears to have hurt the sentiments of those directly involved with readymade garments. Economists and experts have been conspicuously silent on this issue which should be enough of an indication that few sympathised with the demands of the garment manufacturers, although the knitwear sector could have used some assistance which even the finance minister later agreed at a meeting with the knitwear manufacturers.
   It is evident from the outlay of the stimulus package and the specific measures focusing upon export sectors that the package presumes a continuation of strong outward orientation of the economy, although a more inward orientation might help Bangladesh to fare better through the financial crisis should it begin to tell upon Bangladesh’s international trade prospects. Then again a stimulus package aimed at countering the effects of an international financial meltdown that might only affect the economy indirectly, the government would, for the short term, look towards providing assistance to the export sectors.
   However, on the outward orientation, even as much as can be gathered from the projections for the next fiscal year, the government does not appear much concerned about creating employment, generating demand or boosting local consumption in order to sustain the economy. The sole exception is the poultry industry perhaps only to prove the rule. This industry is hardly export-oriented and aimed fully for local consumption. Having been doubly hit many poultry plants were forced to shut down with thousands losing their jobs.
   When the military-controlled interim regime brought about sweeping tariff measures, apparently upon the advice of the International Monetary Fund, increasing the tariffs for a number of industrial raw materials and decreasing them for finished consumer and luxury goods, the poultry sector saw its production costs soar with feed, chicks and equipment becoming much costlier almost overnight. This was followed by the avian flu scare. Thus, assistance to this sector would generate some employment and subsidies would also help keep production costs low that would eventually result in lowering chicken prices on the market thus increasing consumer welfare.
   Similar to poultry, the dairy sector, which is apparently going through a tough time, could have been included in the package with cash assistance and higher incentives in order for the cost of dairy production, especially milk, to become cheaper. Apparently, the major brands of dairy milk suppliers are refusing to purchase milk as powder milk has all of a sudden become cheaper. There is a strong demand for dairy milk in the cities, where people are compelled to choose from milk brands with the nagging suspicion of feeding their children with melamine-tainted milk. A large section of residents in Dhaka would be willing to pay a handsome premium for dairy milk of good quality. This is perhaps one of those few sectors that would show immediate results with some government assistance.
   The increased cash assistance to the export sectors would surely contribute to their competitiveness, especially when considering that manufacturers and producers of like products in other countries might get similar assistance. But this assistance also presumes that the export market will remain as it is with its demand as before. The package does not suggest that the government apprehends the consumption of foreign consumers who are more directly hit by the financial meltdown would shrink at all. But that will very likely happen in case of high-end products while low-end high-volume products might fare better. That is perhaps one reason that the garment sector continues to exhibit little sign of being affected.
   The matter that begs further explanation is how the government would raise these funds as they have been allocated in addition to what there was in the budget. This would either have to be through higher taxes or through new money. Both would have strong implications for an economy where the government is trying to stimulate the market. Alternatively, of course and perhaps that is a more practical solution, the sourcing of these funds might only need some paperwork. It is only common knowledge that funds allocated for the annual development programmes under the budget seldom get spent. In fact, this year a large portion of those funds will almost surely remain unspent and all the government would have to do is reallocate them. But since it would be the same lethargic bureaucracy managing and channelling the funds and the same government machinery trying to spend the money, at least a portion of the funds might very well end up unused as is typically the case. As has been pointed out before by economists and experts, the problem is more to do with efficient and effective spending of funds rather than the act of allocating these funds.
   If the rate of implementation of the stimulus package is anything similar to that of the annual development plan that the government has displayed in the last two years, then the business quarters would not have much to look forward to. One can only hope that political direction would help the bureaucracy become somewhat more earnest.
   Interestingly, agriculture was included in the stimulus and allocated a large chunk, Tk 1,500 crore, as subsidies. One wonders how that subsidy is going to be used. At the very end of boro season, the farmers would not require funds for either irrigation or fertiliser as it would hardly help the yield at this point. An announcement by the agriculture minister, Matia Chowdhury, that fearing corruption and irregularity the government has decided against it precludes the possibility of direct cash assistance to the farmers.
   Corruption or irregularities, however, do not seem to deter the government from providing direct assistance to the exporters. Surely it is a much more complicated and a far more taxing exercise for the government to execute such a programme for farmers, but the benefits would also be equally rewarding, for the government as well the people, its constituents. With rice prices falling through the floor, farmers are dreading the time that they will have to harvest their crop and take it to the market to sell.
   The other measure to help the lot of poor farmers was an additional outlay of Tk 500 crore for the recapitalisation of small loans. However, there are no indications that this effort will be coupled with that to relax the prohibitive amount of paperwork and requirements for the small and marginal farmers to avail such facilities. But the bigger question still remains the price of rice, which according to a number of observers has plummeted not entirely due to economic reasons but due to the government’s agreement with the garment factory owners’ request to sell the allotted rice through open market sales instead of rationing it to the garment workers. This had apparently caused the prices to plummet in the market as well. But the allotted rice remains unsold and the government is now burdened with substantial stock of rice procured from the last boro yield. Unless this is off loaded soon, the government will be unable to carry out fresh procurement this boro season, which is likely to be another good harvest.
   The package, which is worth less than even one per cent, closer to half a per cent in fact, of the entire GDP does not address the prospect of increasing employment generation in the domestic market. It is important because one of the major unsettling impacts of financial crisis or recession is an increase in unemployment also giving rise to social tension. Employment generation could well be one of the main tools counter those effects. In that respect that package remains almost entirely silent. Although one would hope that the budget for the next fiscal year would lay strong emphasis on the domestic economy, creating employment, raising demand and boosting consumption, there is little indication that it would receive the kind of attention it deserves.