The minister says contingency plans are being activated to minimize disruptions to the economy and people
The Ministry of Economic Affairs (MoEA) is preparing to ensure supply adequacy in case imports of goods and commodities get disturbed from India, economic affairs minister Loknath Sharma said.
He said with the second wave of the Covid-19 continuing to wreak havoc in India, the implication reflects in Bhutan.
On the increasing inflation and rising prices of goods and services, the minister said that inflation has no straight and quick answer as it is a market force. Any intervention to address and suppress might backfire in the economy.
“When goods and services get disturbed in India, the inflation rates will increase in our country,” he said.
He added that the inflation currently with the pandemic could be termed as cost-push and supply shortage.
“For Bhutan, inflation is mostly mirror image of India plus as we are an importing country, and sometimes cost-push in case of domestic agricultural products,” he said.
However, what is certain is that almost all states in India are now affected, going by the reports in India. Assam and West Bengal are also critical. More than 20 Indian states have imposed curfews and other curbs the past week and this means a large number of the Indian population as high as 80% are under some level of lockdown.
According to Lyonpo Loknath Sharma, the movement of goods and people is affected, and the ministry is constantly monitoring the situation and activating their contingency plans to minimize disruptions to the economy and to the people.
“We are trying to ensure imports of goods and commodities responsibly,” the Lyonpo said, adding that the Department of Trade has instituted a dedicated team that monitors and advises on market adequacy of goods and commodities. This will at least address the supply shortage.
Earlier, Prime Minister Dasho Dr. Lotay Tshering said that people are already complaining about the inflation rate as it is a direct reflction of the cost price in India. “The government is worried if the trade gets distracted with the increasing Covid-19 cases in India,” he said.
According to the MoEA, the Office of the Consumer Protection will consistently monitor unfair trade practices as well so that demand-pull cost escalation does not happen in the country.
“Business must remain ethical and relevant during such crises,” the Lyonpo said, adding that while they cannot address or suppress prices in other ways as the cost is increased from the source, and any intervention to regulate through monetary or fiscals measures might distort the market or expectations.
In addition, Lyonpo said that for agricultural commodities, it is the season of enhancing productions; particularly vegetables so they are banking with increased production so that the supply will be adequate.
“We might have to acknowledge the rising prices during such difficult times, and the government will at least ensure that the costs do not escalate due to market shortages, supply chain disruption, and inadequacy,” lyonpo said.
“The tax rate in India has also increased, we are importing things with the increased cost price in the border,” Lyonpo shared.
Meanwhile, the MoEA also acknowledges the Government of India. Despite the most severe pandemic challenge being faced, the GoI also continues to ensure that the Indo-Bhutan trade flows are not disrupted.
Kinley Yonten from Thimphu