ON THE day of the last Eid-ul-Azha I asked a beggar how all those pieces of meat she collected from door to door she would feast on with her family of six members. Her reply: ‘I have collected about 5 kilograms of meat. I will cook one kilo for my family to feast on and the rest four kilos I will sell to a slaughter shop for Tk 200.’ To my idea that she could also be handed liquid cash of Tk 1,200 instead of five kilograms of piecemeal meats she promptly reacted: ‘Let alone Tk 1,200, even Tk 600 in cash would have been much better than 5 kilograms of meat.’
Proprietors of slaughter shops, as a traditional malpractice, buy from beggars, who cannot afford to bargain for a fair price, those valuable meats of fatty sacrificial cows for not more than Tk 50 per kilo while the same shops sell meat of normal skeletal cows for no less than Tk 220. In fact, five kilograms of meat of the pricy cows the beggar collected did cost the original meat-donors at least Tk 1,200, given the high price, say Tk 20,000 per sacrificial cow Muslims buy during Eid-ul-Azha. Donors’ sacrifice of half the cow’s price, according to the beggar’s judgement, would have made recipients of the donations much happier, if the handouts were in the form of cash instead of meat.
Out of about 154 million people of Bangladesh not more than one million people can be found who can be designated as rich who own their individual homes in urban areas and are blessed with creature comforts to lead a modern and decent livelihood. The rest 153 million people are generally poor who may be classified as groups living in abject poverty, lower-income, middle-income, upper middle-income, and reasonable affluence.
Although more than half of our GDP is generated through the service sector, nearly two-thirds of Bangladeshis are employed in the agriculture sector, with rice as the single-most-important product. So, obviously our government must provide subsidies for the farmers on account of their agricultural inputs such as seeds, fuels and fertilisers and the government must also be ready to buy their products if the market is dull. Similarly, the poor consumers must be given relief on account of their two basic physiological needs such as food and health, the two areas where tonnes of money from the government exchequer have been pouring in the name of subsidies, but mostly in futile due to greedy interventions by multiple agents in the whole process.
Frankly speaking, I don’t understand the ‘subsidy’ thing! Is there anyone actually handing a check or a pay order or making a bank transfer to anybody’s account and saying, ‘Here, this is your subsidy payment’?
Subsidy which is being defrayed in the form of agricultural inputs could merely be a ‘notional subsidy’ or ‘opportunity cost’ – which would be the revenue – that is being lost because the inputs are being sold locally at less than normal price. In other words, extra revenue that could have been earned and put to good use has been lost.
But, who exactly is paying this subsidy to whom? The government is paying subsidy to the poor and the rich is reimbursing the payment? If the answer is ‘yes’, in my humble opinion, ‘this “yes” is the flagrant most “lie” and such subsidisation is a thuggish brutality to the poor.’ As a matter of fact, subsidy meant for the poor reaches the rich in substance and tantalises the poor as a beacon of hope to be turned ultimately into frustration. If we minutely analyse the marketing mechanism of the farmers’ ‘buy and sell’ we will find a dismal picture of the so-called givers, ostensibly benefactors, cheating the recipients, supposedly beneficiaries.
Newspaper readers like me are quite curious about words uttered and steps taken by Matia Chowdhury, our agriculture minister. Given her background of chequered political career and unalloyed integrity, she is perhaps one of very few in the cabinet who is under huge pressure in search of policies and strategies in the agriculture sector that may help the new government meet people’s Himalayan expectations.
In a recent workshop on diesel subsidy organised by the Bangladesh Institute of Development Studies, where Matia Chowdhury attended as chief guest, a study report said there was a leakage of around Tk 50 crore (Tk 500 million) in payment process of cash subsidy on diesel to the farmers in the last year. Some 27 per cent eligible farmers were not listed, 13 per cent ineligible persons received subsidy and 18 per cent eligible listed farmers did not get the payment under the programme of cash subsidy on diesel. Last year, it should be mentioned, a non-partisan caretaker government backed by the disciplined armed forces was in power when Tk 2.5 billion was disbursed as cash subsidy on diesel to the farmers.
I as a banker felt a little swollen with pride and a glimmer of hope was raised by the words of Matia Chowdhury who in the same workshop said steps to disburse subsidy through banks would be considered to stop malpractices in distribution of cash subsidy by officials of union parishads and agriculture extension departments.
The reported leakage of cash subsidy on diesel through a BIDS study with break-ups in percentages of ‘who got how much or didn’t get at all’ is at least a revelation made possible because of ‘cash’ which in accounting is extremely a hot and visible item and must be entered properly in books and registers. If diesel were distributed at heavily discounted price the BIDS study on leakage of the subsidy funds perhaps could not have been numerically and accountably so clearly revealing and highlighted. Now if the government with help from the armed service personnel can identify and register the actual farmers such fund leakage may be tight-sealed for ever, provided cash subsidy continues.
Statistics, especially inferential statistics, is an interesting discipline of mathematical science that can provide the government very effective tools for assessment and prediction of the needs of masses, if correct data can be collated through reliable agents. Now that we already possess a huge demographic database, more or less reliable, thanks to issuance of national identity cards for all matured men and women, what is now needed is to correlate and crosscheck those data with the data of unregistered and registered farmers with a view to sifting out the genuine from the fake.
Interesting success stories of offering subsidies through cash disbursements can be observed in distribution through banks of stipends to primary and secondary students, freedom fighters, the disabled, the destitute and the old. Not many incidents of corruption are reported in these transactions. The secret tools behind the successes are cash, proper registration and accounting. Imagine how cantankerous the scenario would have been if the subsidy funds for these stipends would have been defrayed in the forms of inputs like food, medicines, toiletries, CI sheets, clothes, blankets, books, and other materials bought by contractors and handed out by government agents at subsidised prices.
A blacksmith’s job is to make and repair articles made of iron and a potter’s job is to make clay pots by hand; under no circumstances they should be asked to swap over their jobs. Ironically, many of our jobs are done by professionals trained in diametrically opposite disciplines; a botanist is working as a banker, an accountant as a magistrate, or an engineer as a diplomat.
The government’s main function as regards to commerce is to frame policies congenial to private entrepreneurs. Commerce and trade should not be the domain where government functionaries have to work as procurement agents or salesmen unless there is a crisis like war or famine or a major global economic meltdown. To break monopoly or unholy syndication of unscrupulous tradesmen the government may of course keep some outlets or mechanism ready to provide succour to the needy. But, direct intervention in perpetuity by the government in trading or in crippling the market forces would scare the genuine businessmen away leaving a vibrant economy to gradually retard.
There are many instances of government intervention where subsidising commodities by means of lowering tariff and duties or by selling at discounted prices with an honest intention did instead of putting the poor out of harm’s way throw them from the frying pan to fire because most of the agents handling the subsidisation are either inept or corrupt. Subsidized fertilisers, for instance, are more beneficial to the industrialists manufacturing melamine articles than to the farmers producing rice; and due to price differential between neighbouring countries subsidised fuels fly across the border from many of our gas stations that were deliberately set up in our border areas.
But subsidisation is a must in a country like ours teeming with the poor. To my humble opinion the government may henceforth stop the whole gamut of subsidisations in all kinds and in all sectors including food, health, education and agriculture in whatever forms, call it lowered tariff for agricultural equipment and inputs, fertilisers or fuels for free or at discounted prices, nominal tuition fees in educational institutions or free admission and free medicines in public hospitals. Then the immediate step should be to liberate all the local market forces to play in conjunction with free market forces of the world to ensure the best delivery of goods and services to the rich and to the poor alike.
Now one may ask how then the poor will survive. The answer is simple: give them cash to fill the gap between the prices of three basic goods and services on account of food, health and education they will have to buy from the free market and their respective affordability.
The sum total of all the seen money the government has to plunk down from its coffer for subsidising expenses of the poor and the unseen money drained as systems loss due to rampant corruption in every facet of our society, I am quite sure, would be an astronomical figure that may surpass even the amount that as subsidy to the poor is printed in our annual budget. Multibillion taka, thus freed from the destructive methodology of subsidisation, must be more than enough to reimburse the fissure between the income of the poor and their expenditure in free market economy without any system loss.
In the United States every citizen has to file his/her tax return no matter his/her income is taxable or not. After thorough evaluation of individual tax returns the taxation authority instead of charging tax rather automatically credits a returnee’s account with subsistence allowances if his/her annual income is far below the minimum tax threshold.
Our government, if it is bold enough and if it really means to bring about a real change in our system, may make it mandatory for all citizens to open bank accounts and file their annual tax returns. A rickshaw-puller, a landless farmer, a teacher, a banker, a civil or military servant, an industrialist, a philanthropist, or even a beggar all would have their accounts with banks and tax identification number registered with the income tax authorities.
At the beginning of every month millions of cell phones (if the government is kind enough to gift each citizen a cell phone set at discounted price as a gesture of goodwill) would be buzzing with text messages from their bankers announcing credits of their accounts with monthly subsistence allowances. One such text message may say: ‘Mr Kalu Mia, TIN # 123456789, the NBR, after evaluation of your tax return, has been pleased to credit your bank account with Tk 3,575 as allowances you would need for your livelihood for the current month.’
