For a few days after the formation of this government, the relief to the people was in the headlines. When the budget was ultimately announced, no one could see any direct relief package. Instead, it was feared based on the processes and features of the budget that it may have very pervasive impact on the people confronting day to day hand-to-mouth problems. Indeed, the post budgetary situation has already corroborated this.

At a time when the role of invisible hand was partly discarded even if for the time being in the capitalist world, the same, however, played the most decisive role in the present budget making exercise. The forces succeeding to capture the policies and resources of the state prevailed in the budget making processes again. The budget gave the signal that the onslaught of the liberalism led policies on the poor and resource less people will continue. Interestingly, given the composition of the coalition, reactivation and re-institutionalization of the clientalism and or patronage system was on the making during budget preparation with renewed efforts at deepening and/or widening the net of rent seeking practices. The interplay of the combined coalition and its decisive influence also ensured that no institutional and structural related reforms are carried out that one way or the other could undermine their interest.

The converged interest of various coalitions and their sub-ordinates provided incentive structure to the unethical business activities including hoarding, black marketing, cartelling and syndicating with unprecedented pressures on the price front. If this would not have been the reason, how can one believe that the prices of essential commodities could go up by 40 to more than 100 per cent within a week of the budget announcement. This is a time when, owing to recession in the west, the price rise at the global level is the lowest after many years. This is also a period when the price rise in neighboring India is either very low or negative. Last week it was negative by 1.54 per cent.

Since the past week there has been some move to discourage hoarding as the raids of some godowns by the administration indicates. Similarly, instructions have been given by the administration that shops should keep the price lists to be conveniently visible to the buyers.

The problem of price rise is deeply rooted, much more wide ranging and very serious. It is not as if blocking of few stock shops and loose price listing without following any norms or fixing reference prices will solve the steep price increase problem. It is not a charity type or superficial isolated matter. A recent study by the Institute for Policy Research shows that price rise is a multidimensional problem exacerbated by a host of factors. As the study shows, border price in Nepal is quite high compared to border prices in India. At the same time, the trade margin from border to Kathmandu is so high that in a single transaction it exceeds 10 per cent. The transport margin is extremely high which is again fuelled by other expenses on the road. The findings clearly support the notion that cartelling and syndicate system are the major culprits for price rise in Nepal.

The existing Acts associated with price related issues are so strong that any misconduct or artificial price rise by any in whatever form could be the subject of severe punishment. But it has been a matter of deep concern that the provisions of the Acts have never been implemented. The advocates of the neo-liberalism have always pushed the laws to the background on the grounds that their implementation will jeopardize the fundamental notion of the so called market principles. The listing of prices without fixing the reference prices will be of little relevance from the standpoint of controlling prices of essential commodities. At the same time, there is a need for reviewing the whole gamut of policy stands. The view based on liberalism principles that the prices are simply the monetary phenomenon are completely discarded by the price tendencies in Nepal, more so the recent developments in this area. The continued price rise in Nepal compared to India is not only contradictory to the monetary principles but also opposite to the customary views. Quite often, there is no symmetry between the excess supply and price rise as the quick aggregative type analysis indicates. Supply disruption due to bandhs, road blocks and some minor incidents has become a common phenomenon.

A complete review on the factors responsible for price hikes have to be made along with framing of comprehensive policy and program package which focuses on price control as well as supply of essential commodities to the needy at an affordable price. But it is most likely that even in a situation of half-hearted move in this direction, the bickering in the coalition will manifest due to the reasons stated above. The message to the people is not to expect much from such a coalition which quite opposite to its commitment to the people of relief as a first priority silently encouraged price rises on such an unprecedented scale.