DHAKA THIS WEEK

Mahbub Husain Khan

The 1st of April, this year, was Eid-e-Milad (Mawlid) un-Nabi, the birthday of our Holy Prophet (Sm), the 12th of Rabiul-Awwal. The observance of the milad (mawlid) as a public holiday began around the 6th AH/12CE.In 670 AH/1291, the Merinid Sultan Abu Yakub introduced Milad celebrations in Morocco, and in Mamluk Egypt, a century later the fervour of the celebrations reached great heights.
   The manner of observing Eid-e-Milad-an-Nabi is a matter of local custom, in various countries. Most typical is the recitation of various litanies in mosques, as in Bangladesh. In countries that were once part of the Ottoman empire, it is the custom in the milad to recite the Burdah (The Mantle), a poem by Al-Busiri whose theme is praise of the Prophet. In some countries there are street processions such as the procession of wax displays in Morocco. perhaps inspired by Spanish Saints' processions.
   On Monday (2nd April). Lieutenant General Moeen U Ahmed said that the people of Bangladesh are to decide whether they need a new system of government and democracy against the backdrop of political failure and corruption of past political parties. He presented a keynote paper at the conference held at the Dhaka Sheraton, entitled 'Rethinking political Development: Security and Democracy'. His paper and his reply to queries made at the conference are of great significance in the present situation and the planning and functioning of the present Caretaker Government.
   The decisive step towards a good society is to make democracy genuine, inclusive. People's votes would then be specifically, even diligently, solicited, with emphasis on the need for the safety net and on the quality of publicly provided schools, housing, health care, recreational facilities and much else. Thus the prime essential for achieving a good society is a more nearly perfect expression of democratic will; democracy must be made genuine, inclusive the votes of the poor are essential for getting the public services they need, for raising the necessary revenues and for instituting the broad policies that ameliorate poverty- in short, for achieving a first step towards the good society.
   Democracy has its compelling requirements. There must be a clear perception of the goals to which the majority should be committed. And there must be organisation to mobilise voters and persuade legislators in support of those goals, In recent times the nature and magnitude of this effort have become clear. Money, voice and political activism are now extensively controlled by the affluent, the very affluent and the business interests, and to them much political talent is inevitably drawn. The expression of their goals is then accepted as public opinion. Let there be a coalition of the concerned and the compassionate and those now outside the political system, and for the society to be good and humane there would be a bright and wholly practical prospect. The affluent would still be affluent, the comfortable still comfortable, but the poor would be part of the political system. Their needs would be heard as would the other goals of the good society. Aspirants for public office would listen. With true democracy, the good society would succeed, would even have the aspect of inevitability.
   
   PSC affairs
   Recruitment by the Public Service Commission (PSC) has been questioned by the public and those affected, since the days of the Pakistani regime. It was alleged in those days that the CPSC used to favour candidates from West Pakistan in recruitment of central cadre services such as the Civil Service of Pakistan. However, even in those days, meritorious candidates from East Pakistan such as our present Chief Adviser and three other advisers in the Caretaker Government scored very high including the top positions in the combine list of successful East Pakistani and West Pakistani candidates. However, over the years since 1972, the recruitment by the Public Service Commission has become increasingly politicised and lacked transparency. In some cases even members of such an august body as the PSC have been accused of graft.
   In order to remove the taint of non-transparent, politicised and non -accountable recruitment for the highest to the lowest echelons of the public service, a recent UNDP study has suggested a high-powered committee headed by the Chief Justice for selecting the Chairman and the Members of the PSC. The draft of the study was presented at a round table jointly organised by the Establishment Division and the UNDP at the BCS Administration Academy on 3rd April (Tuesday). The study suggested that the Chief Justice could be the convenor of such a committee with other members including senior judges, lawmakers from the ruling and opposition parties including representatives of the Prime Minister and the Leader of the Opposition, leaders of the civil society, vice chancellors, with the Cabinet Secretary acting as the secretary to the committee. Amongst other recommendations were suggestions that two or three PSCs may be set up for recruiting civil servants, technical services and education cadres, and the latest recruitment methods which are in place in the advanced countries may be adopted. In a recent roundtable organised by the PSC, it was said that the most modern recruitment processes ensuring secrecy and correct assessment of merit is in place, still the PSC has been blamed for politicised recruitment, such as in the recruitment of election officers during the BNP-Alliance regime.
   The problems inherent in the bureaucratic syndrome, as evident from the accusations against the PSC - present and past - in public and private discussions do exist in the PSC structure and procedures as in any large organisation. Their solution is in the hands of vigilant leadership in the executive and legislative branches, and solution is essential if our society and public agencies are to work effectively. We hope and expect that a move undertaken by the present CG, based on the recommendations of the UNDP report, would lead to proper recruitment of our public servants and hence good governance in the service of the peop1e.
   April Fools' Day, also called All Fools' Day, is the first day of April, named from the custom of playing practical jokes or sending friends on fools errands on that date. Although it has been observed for centuries in several countries, the origin of the custom is unknown. It resembles other festivals, such as the Hilaria of ancient Rome (March 25) and the Holi festival of India (ending March 31). Its timing seems related to the vernal equinox (March 21), when nature "fools" mankind with sudden changes in the weather.
   On April Fools' Day all people are given an excuse to play the fool. In France the fooled person is called poisson d'avril ("April fish"), but the origin of the name is unknown. The custom of playing April Fools' jokes was taken to America by the British. It has continued to be observed by children and adults and sometimes involves rather elaborate hoaxes as well as merely simple jokes.
   There were important events within days and weeks of my birth. A week after I was born Franklin Delano Roosevelt died in Warm Springs, Arkansas. Nearly three weeks after my birth Mussolini and his mistress were shot and hung head down in Milan. On that same day Hitter shot himself and his mistress Eva Braun. A month after my birth. General Alfred Jodl of Germany surrendered to the allies led by General Eisenhower, Supreme Commander. And then in I 947 we were free of the British. Those of us born at that time had a different outlook than our earlier generations. Blinkered by need and less prosperous fames, they had come of age with commitments to the glory of God, the glee of acquisition, or the mean little business of survival. But we took seriously the freedom from the British and then subsequently the birth of Bangladesh. Our birthright was not merely life and liberty, but the pursuit of happiness.
   The nineteen - sixties are regarded as a storm that came and passed a cyclone that blew through, its damage long repaired. But among the era's more enduring legacies was establishing a style of youth, of being young, that's been passed on for thirty years now by example in an endless chain of kids. Whether it's matters of speech, or the torn jeans, shoulder length hair, and rock and roll, we developed rites of passage of a surprisingly enduring nature.

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Oil prices doubled in 3 years

Oil prices have doubled in the last three years rising from close to US$30 per barrel in January 2003 to US$ 65 per barrel at present. The current bout of high oil price is mainly due to a surge in global demand, which in turn is due to the fast growing economies of China and India. Moreover, there are near-term capacity constraints as well as a risk of supply disruptions due to the volatile situation in the Middle East.
   Global forecasts suggest that oil prices will continue to be over $US 50 per barrel for the next couple of years. With rising oil prices, Bangladesh's import bill has also risen. As domestic prices have only been partially adjusted, demand for petroleum products has continued to grow, and rising international prices have had virtually no impact on the quantity of petroleum imports in the past few years. Since FY03, the overall import bill has gone up by over 50 per cent from US$ 1 billion in FY04 to US$ 2 billion in FY06. During this period, petroleum imports have accounted for a much bigger share of total imports; the share has risen from 9.2 to 13.6 per cent.
   The extent to which higher oil prices are passed on to consumers is a key measure of a country's response to higher oil prices. The ratio of the increase in the retail price to the increase in the international price, both measured in local currency is known as the 'pass-through coefficient'. Bangladesh's pass-through coefficient is the lowest among some of its comparator Asian countries.
   With the exception of kerosene, domestic petroleum prices are highest in India and lowest in Bangladesh. The gap between Indian and Bangladesh prices is very large. Even Nepal, which is poorer than Bangladesh, has higher fuel prices than Bangladesh. A major implication of the price differential with India is the incentive to smuggle petroleum products, especially diesel and kerosene, out of Bangladesh and sell them in bordering towns in India. This results in a significant net loss to the economy, as a large chunk of the subsidy on diesel and kerosene is enjoyed by Indian consumers.
   Bangladesh has limited access to international capital markets, domestic savings are limited, and its revenue mobilization capacity is extremely weak. Therefore, there is a good case for increasing the extent of pass-through to the consumers based on economic efficiency and macroeconomic sustainability. Standard public finance theory suggests that since oil is a private good, it is most efficient that consumers pay the market price for oil. This will induce them to conserve the use of oil, which will also help in the long-term adjustment to the reality of higher prices. So far the huge BPC deficit has been financed by borrowing from public banks and BPC has been unable to service its debt to the public banks. This will only grow further if the prices are not adjusted, unless the government provides budgetary support. The latter in turn may require expenditure cuts somewhere else, given that the budget deficit cannot simply be increased willy-nilly.
   There is often the apprehension that raising petroleum prices will trigger inflation. A rise in petroleum prices has a direct effect on consumer prices as well as an indirect effect through increased transportation and other business costs wherever petroleum products are used as inputs. In most cases, a prudent monetary policy response of tightening credit in the economy could check inflationary pressures. The bottom line is that while an increase in petroleum prices has a potential to increase inflation, the government could always use a prudent monetary policy stance to check inflation. Financing the deficit created by oil subsidy through bank borrowing, as is the present day case in Bangladesh, could be more harmful for inflation than an increase in diesel and kerosene prices.
   Kerosene in Bangladesh is used for lighting and cooking by the poor. Therefore, any increase in kerosene prices could hurt the poor. Besides being used as an input for transportation, diesel is used for irrigation pump sets in Bangladesh. A price increase in diesel could therefore also hurt farmers. The question is: What portion of the budget of the poor (urban and rural) is spent on kerosene and diesel?
   Bangladesh's Household Income and Expenditure Survey (HIES) data for 2005 indicate that both diesel and kerosene form a very small part of the budget of the poor. In fact, the current low prices of kerosene and diesel mostly benefit the better-off population The direct impact of an increase in kerosene and diesel prices in terms of the effect on household consumption and welfare is likely to be quite small for the poor. This is because spending on kerosene and public transport account for a small share of a poor household's budget. Estimates using HIES 2005 data show that expenditures on kerosene and public transport account for 1.3 and 1.9 per cent, respectively, of the average household budget of the poor.
   The direct impact of any increase in prices of electricity and cooking gas (which results from a petroleum price increase) on consumption of the poor is also likely to be very small. According to HIES 2005, expenditure on electricity and gas constitute 0.5 and 0.1 per cent respectively of the average household budget of the poor.
   A preliminary analysis with the Bangladesh Social Accounting Matrix that calculates multiple-round effects of a hypothetical 50 per cent increase in the average utility price shows that the impact on consumer prices faced by poor agricultural households is 0.5 per cent. For wealthy urban households, it is one per cent.
   In spite of higher oil prices, kerosene and diesel continue to be under-priced in Bangladesh. As higher oil prices are likely to stay in the near future, the cost of delaying adjustments could be much higher. The case for eliminating kerosene and diesel subsidies in Bangladesh is strong. Otherwise, with each passing day, week and month, the financial burden on BPC will continue to grow. The petroleum price adjustments made on April 1, 2007 were long overdue and will help avert major economic problems. The social equity and inflation concerns expressed by some observers can be managed by other sensible policy interventions. Inflation can be checked by a prudent monetary policy stance. If required, a targeted subsidy could be provided to the poor though the merits of doing so would need to outweigh administrative costs.

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