RECENT EFFECT OF INFLATION OF BANGLADESH

Executive summary
Bangladesh is a country of about 135.2 million people consisting of predominantly mixed group of Proto Austroloids / Drvidians, Mongloids and Aryans. It has an area of 1,47,570 square kilometer with 916 persons living per km, making it the ninth most densely populated country of the world. Bangladesh is well known for its homogeneity of culture and religious tolerance and has emerged in this troubled ridden world as a model state for religious peace and harmony. Situated as Bangladesh is on the deltaic region of three mighty river systems- the Ganges, the Brahamaputro and the Meghna much of the country's land areas has been built up from alluvial deposits brought down by the major rivers. The country is mostly flat. A branch of Himalayan hills girdles in the south-east border of the country. It is well known for its natural resources and lush green scenic beauty having the largest sea beach of the world in Cox's Bazar, the southern end of Chittagong, the port city of the country.



FOOD prices in both domestic and international markets have reached all-time high in recent times. The surge in the prices of food grains, especially that of rice, has become a matter of serious concern not only in Bangladesh, but also in Asia as well as around the globe. There has been considerable erosion of purchasing power of the poor who spend more than 60 per cent of income on food. This has obviously put them at greater risk of hunger and malnutrition, which has threatened to undermine the gains in poverty reduction that Bangladesh has achieved in recent years. In fact, this may even reverse the trend of poverty reduction unless effective and coherent actions to assist the vulnerable population to cope with the drastic hikes in their food bills are implemented by the government on an urgent footing.


The combination of new and ongoing forces is driving the world food situation and the prices of food products. One emerging factor contributing to rising food prices is the high and rising price of energy. Energy and agricultural prices have become increasingly intertwined. With oil prices at an all-time high approaching $150/barrel, the U.S. government is subsidizing farmers to grow crops for energy. The U.S. farmers have massively shifted their cultivation towards bio-fuel feed stocks. High energy prices have also made agricultural production more expensive by raising cost of mechanical cultivation and fertilizers, as well as marketing including cost of transportation. At the same time, the growing world population is demanding more and different kinds of food.


Rapid economic growth in many developing countries, especially China and India has pushed up consumers' purchasing power, generating increased demand for food. This has shifted food demand away from traditional staples and toward higher-value foods like meat and milk.


This dietary shift is leading to increased demand for grains used to feed livestock. It needs to be noted here that although both cyclical and structural factors have contributed to recent surge in prices, the latter are likely to dominate the former causing the higher prices to persist for the foreseeable future.

Bangladesh, a net importer of food grains, has been seriously affected by food shocks, driven by higher international prices and domestic production shortfalls following the natural disasters. Although domestic upward price pressures eased somewhat by early May, the prices of rice and wheat in the domestic market are still much higher than those of the preceding year. Bottlenecks in the distribution and retail marketing chain, hoarding and panic buying by consumers aggravated the domestic price situation.

















CHAPTER ONE:INTRODUCTION.

1.1Introduction:
The Bangladesh economy witnessed continued upward inflationary pressures in fiscal year (FY)08. The persistent rise in inflation during FY08 was attributed to unprecedented rise in commodity prices in the international market particularly of food grains and fuel, shortfall in domestic food production and supply disruptions due mainly to devastating floods and cyclone, cost escalation of domestically produced goods resulting from price-hike of imported inputs, and market imperfections and disruptions in supply chains. While 12-month point to point Consumer Price Index (CPI) inflation showed an increase from 9.2 per cent in FY07 to 10.0 per cent in FY08, 12-month average inflation rose from 7.2 per cent in FY07 to 9.9 per cent in FY08.

The historical trend shows that inflation in Bangladesh varies directly with food prices. Higher food inflation fuels overall inflation since the weight of food items in the CPT is nearly 59 per cent. As the current inflation is dominated by soaring food prices, food inflation has been higher than non-food inflation. While the average food inflation was 1.4 per cent compared with the non-food inflation rate of 3.0 per cent in FY01, food inflation reached 12.3 per cent in FY08 widening the gap from the non-food inflation rate of 6.3 per cent . The gap between 12-month average food and non-food inflation further expanded in July 2008, as food inflation rose to 12.5 per cent and non-food inflation slightly declined to 6.1 per cent. In FY08, point-to-point food inflation showed mixed trends while non-food inflation mostly declined. Food inflation rose from 9.8 per cent in June 2007 to 14.5 per cent in December 2007 thereafter declining to 9.6 per cent in May 2008 with frequent fluctuations. The rate of food inflation increased to 14.1 per cent at the end of June 2008. The non food inflation, on the other hand, declined from 8.3 per cent in June 2007 to 3.5 per cent in June 2008



1.2Inflation:

The measure of price increases within a set of goods and services over a period of time is known as inflation. The most common gauge of inflation is known as the CPI, or consumer price index, which measure the price increases (decreases) of basic consumer goods and services. The GDP deflator is another very important measure of inflation as it measures the price changes in goods that are produced domestically. In effect, inflation decreases the value of your money and makes it more expensive to buy goods and services.



1.3Types of Inflation:
There are three major types of inflation, as part of what Robert J. Gordon calls the "triangle model"


A.Demand-pull inflation:
Inflation caused by increases in aggregate demand due to increased private and government spending, etc. Demand inflation is constructive to a faster rate of economic growth since the excess demand and favorable market conditions will stimulate investment and expansion.


B.Cost-push inflation:
Also called "supply shock inflation," caused by drops in aggregate supply due to increased prices of inputs, for example. Take for instance a sudden decrease in the supply of oil, which would increase oil prices. Producers for whom oil is a part of their costs could then pass this on to consumers in the form of increased prices.
Built-in inflation: induced by adaptive expectations, often linked to the "price/wage spiral" because it involves workers trying to keep their wages up (gross wages have to increase above the CPI rate to net to CPI after-tax) with prices and then employers passing higher costs on to consumers as higher prices as part of a "vicious circle." Built-in inflation reflects events in the past, and so might be seen as hangover inflation.

C. A major demand-pull theory centers on the supply of money:
Inflation may be caused by an increase in the quantity of money in circulation relative to the ability of the economy to supply (its potential output). This is most obvious when governments finance spending in a crisis, such as a civil war, by printing money excessively, often leading to hyperinflation, a condition where prices can double in a month or less. Another cause can be a rapid decline in the demand for money, as happened in Europe during the Black Death.
1.4 Causes of Inflation in Bangladesh:
The causes of inflation in Bangladesh are many. I would like to mention those causes that would be considered as explanatory variables in our models.The causes of inflation in Bangladesh are summarized as follows;


1. Increase in the supply of money:
Theoretically, money supply is an Important determinant of inflation. The supply of money in Bangladesh is increasing every year. This excessive rise in the total supply of money may contribute to the causes of high inflationary pressure in Bangladesh.


2. Increase in the development expenditure:
Development expenditure are increasing every year in Bangladesh. Since the money spent for social and economic infrastructure can not usually raise the supply of output, such expenditure raises the current price of goods.


3. The rate of growth of output and population:
In Bangladesh the output growth rate is always lower than the population growth rate. The greater percentage of increase in the population has brought about a scarcity of goods. As a result, excess demand occurs that contributes to raise in prices.


4. Higher price of imported commodities:
Bangladesh has to import huge capital goods, necessary consumer goods and even huge quantity of food grain. The inflation in foreign countries causes severe rise in prices in Bangladesh through the importation of commodities from those countries.



5. Increase in wage rate:
An increase in wage rate, without productivity increase or with productivity increase lower than wage increase , causes severe inflation in our economy.

6. Remittances:
Remittances may be another important determinant for inflation.It may cause inflationary pressure in our economy.


7. Savings:
The savings rate of our people is low as most of the people are below the poverty line. Less savings rate may also lead to inflation in Bangladesh.



1.5 Inflation picture in Rural Vs Urban area:

In Bangladesh, inflation is measured separately for rural and urban areas. The expectation is that food inflation will be lower in rural areas than in urban areas while the situation will be reverse in the case of non-food inflation. During FY01, average food inflation was 1.2 per cent in rural areas and 1.9 per cent in urban areas; while, in the case of non-food inflation, the rates were 3.8 per cent in rural areas and 1. 1 per cent in urban areas. In July 2008, average food inflation stood at 12.2 per cent in rural areas compared with 13.2 per cent in urban areas. In the case of non-food category, rural areas experienced an inflation rate of 6.2 per cent in the same month while the rate was 5.8 per cent in urban areas. This shows that, in general, the urban people face a higher rate of food inflation relative to the rural population, while the rural people experience a higher rate of non-food inflation relative to their urban counterparts.

The monetary policy of the Bangladesh Bank (BB) emphasizes the need to accelerate economic growth and ensure reasonable price stability for taking forward the country's poverty reduction agenda. For the purpose, the thrust is to ensure healthy macroeconomic fundamentals essential to sustaining high economic growth, shielding the economy from internal and external shocks (global price fluctuations and financial turbulences), and tapping new frontiers of development. The policy also intends to anchor inflation expectations on realistic assessment of growth and price developments.

For achieving the objectives, Bangladesh Bank (BB) uses monetary instruments in a prudent manner to achieve targeted real sector growth and ensure a reasonable rate of inflation. More specifically, BB routinely uses repo, reverse repo, and BB bill rates as policy instruments for influencing financial and real sector prices while cash reserve requirement (CRR) and statutory liquidity ratio (SLR) for banks remain as sparsely used instruments to influence the volume of credit as and when needed. On the other hand, annual monetary programme uses reserve money (RM) as the operating target and broad money (M2) as the intermediate target.

Moreover, it is now increasingly realized that the challenges facing the domestic economy in the present uncertain global economic environment require BB's monetary policy to play a key role in striking a balance between growth and price stability. This is critical for Bangladesh, especially in countering any threat to macroeconomic stability and achieving poverty reduction goals. While monetary tightening can bring down inflation, it has unacceptably high cost in terms of foregone output and employment which Bangladesh can ill afford in view of its growth and poverty reduction imperatives. This, however, does not negate the importance of avoiding excessive monetary laxity which harms macroeconomic stability and hence growth and poverty reduction efforts.

In view of the above imperatives, BB's recent priority has been to pursue prudent policies that are supportive of supply-side and growth promoting measures especially to ensure unhindered flow of credit to the economy's productive sectors especially agriculture, small and medium enterprises (SMEs), and the rural economy. The policies also encourage increased flow of credit to women entrepreneurs. In order to avoid the build-up of excessive demand pressure, special attention has been given to channelling credit to its intended productive and supply augmenting uses alongside discouraging credit flows to unproductive and speculative uses. Also, in addition to refinance support for agriculture, SMEs, and housing loans, new refinancing lines for socially desirable and emerging activities are under consideration by BB.

In the foreign exchange market, exchange rate stability through arresting any undue volatility is the target to facilitate the import of essential commodities and keep the pressure of imported inflation under control. Moreover, BB's efforts have been directed to enhance the inflow of workers' remittances and increasingly divert remittance receipts to investments in productive sectors for easing potential demand pressure and expanding the economy's productive capacity. Recently, BB has made available forward hedging mechanism to importers for ensuring more efficient import of essential goods.
Obviously, the success of anti-inflation policies requires greater fiscal and monetary coordination to ensure clear recognition of the importance of the monetary policy and support appropriate alignment of relevant policy parameters within the overall macroeconomic framework. Maintaining fiscal discipline by the government and minimizing the dependence on financing fiscal deficit from the banking system, especially from BB, generates less inflationary pressure. It is therefore important to increasingly generate more revenue earnings and find alternate sources of financing such as developing an active secondary market for government securities that would contribute toward improving the quality of BB's monetary management. Bringing appropriate changes in the government's debt management strategy is important to improve the balance between short (e.g. treasury bills) and long term borrowing (e.g. through issuing bonds) since any shift in the borrowing pattern has implications for the conduct of the monetary policy.

Moreover, the issue of reduction of government's dependence on bank borrowing to finance fiscal deficits needs careful consideration for which, like in other countries, fiscal responsibility laws can be enacted to restrict government borrowing from BB and limit the government's option of having large debts. Along with promoting government savings instruments especially targeted toward non-resident Bangladeshis, adopting fiscal responsibility and debt limitation law by the government to restrict the extent of debt monetization would enhance the effectiveness of monetary policy instruments. In addition, further strengthening of debt market infrastructure for promoting a vibrant secondary bond market and adoption of international prudential norms for banks and financial institutions would bring consistency and accountability and ensure financial inclusion of all.

During 2008, relatively good real sector growth despite significant domestic and global adversities, pursuit of prudent monetary measures by BB, and supportive fiscal and growth promoting measures by the government played key roles in containing inflationary pressures in Bangladesh relative to many other countries in similar situations.

At present, BB's monetary policy remains supportive of increased domestic production which, along with keeping demand side pressure under control, has been taken as the most effective strategy to fight the present inflation in the country. The compulsion for Bangladesh is to bring down inflation from its current level of around 10 per cent keeping in view the complexities of globally transmitted inflation and the need to conditioning perception of inflation in the range of 5.5-6.0 per cent in the next two to three years so that an inflation rate of around 4.5 per cent can emerge as the medium term objective. This is needed to ensure smooth integration of the domestic economy into the global economy and pursue the goal of sustained high growth over the medium term.




























Chapter Two: Objective of the Study



1. To know what is inflation.

2. To gain knowledge about various types of inflation.

3. To learn the method of measuring various types of inflation.

4. To know the recent condition and effect of inflation of Bangladesh.

5. To find out the sources and causes of in inflation of Bangladesh.

6. To gain knowledge about the relationship between inflation and economy of Bangladesh.

7. To know the method of controlling inflation.

8. To give some suggestion, recommendation, solutions to overcome these barriers.





Chapter Three: Background of the study

In an open economy, transmission of trading partners’ inflation to the domestic economy is one of the aspects how domestic inflation may be fuelled up. In fact, recent inflationary period of Bangladesh is mostly explained by a surge in prices of commodities at the global market on which Bangladesh is highly dependent for final consumption. And as a small open economy and a net importer of food commodities, the Bangladesh economy needs to accept higher prices of world food commodities. Similar trends have also been observed in the case of non-food commodities as large amount of capital machinery and raw materials for some leading exporting industries such as ready-made garments (RMGs) in Bangladesh are also imported from abroad.
The transmission of trading partners’ inflation to the domestic economy can be both direct and indirect. In the direct way, higher prices of imported consumer goods and inputs may quickly transmit to the domestic economy. However, domestic inflation and higher prices of imported commodities and raw materials are connected in several ways. First, domestic inflation of final consumer goods may increase directly due to higher prices of those items at the international market. It is expected that higher prices at the production level in abroad due to higher prices of inputs such as oil and labor, may increase the prices of final products in abroad and the imports of those commodities to the domestic market will eventually increase the consumer prices at the domestic market. Lower agriculture production in abroad due to natural disasters such as drought or the increase of use in cropland for other production purposes may create a situation of excess demand among countries, which can have a positive shock on prices of those commodities in the international market and eventually will push the domestic consumer prices to go up. The higher freight charge or higher transportation cost of imported items due to higher prices of oil may add to the final consumer prices in the domestic market. In a similar fashion, higher tariff rate on imported items will put an upward pressure on the selling price in the domestic market. In the indirect way, for example, if China’s inflation rate is higher than in Bangladesh, then it is rationale for traders to take advantage of price differentials, or arbitrage. Arbitrage will increase the demand for tradable items in Bangladesh, and hence raise domestic prices. Moreover, higher price of imported inputs for domestic export sector may increase the price of exports. A rise in export price directly improves the earnings of the exporters which will result in increased expenditure and will cause a demand-pull type of inflation. An improvement in export earnings also may encourage the exporters to import more raw materials from abroad for their production and the resulting outcome will be a further rise of inflation. One may term the above as structural inflation and stress on structural rigidities of the economy as the principal cause of inflation (Jhingan 1997). The process starts with the increase in non-agricultural incomes at the initial phase of development accompanied by high growth of population that tends to increase the demand for goods. More specifically, as the demand for agricultural goods rises with their domestic supply inelastic, prices of agricultural goods rise. The output of these goods doesn’t increase with the pace of their price rise due to a defective system of land tenure and other rigidities in the form of lack of irrigation, finance, storage and marketing facilities, and bad harvests. As imports in large quantities are hampered due to foreign exchange constraints and the prices of imported products are relatively higher than their corresponding domestic prices, the process pushes the domestic price level to rise. In another indirect channel, prices of domestic substitutes will increase due to higher prices at the international market, mainly due to two reasons. First, if the supply of that commodity is fixed in the wholesale market, the demand for domestic substitutes will increase due to higher prices of imported commodities. Second, the production of substitute goods may take a long period which will put pressure on demand of existing availability of those commodities. The resulting effect in either of the above cycles is higher prices of domestic substitutes of imported commodities. Thus, trading partners’ inflation may have differential impact on domestic inflation and may fuel up domestic inflation. At the aggregate level, the channel through which the effect of international price changes is reflected in domestic inflation is the direct relationship between consumer price index (CPI) and import price index (IPI). If commodity prices at the international market rise, it will be reflected in IPI and consequently will affect domestic CPI. However, this note identifies indirect channels as well – higher input price or substitution effect – through which imported price may affect domestic prices. Thus we call the underlying estimated inflation rates as ‘inflation rates of import-concentrated
commodities’ rather than ‘imported inflation.’






Chapter Four: Limitation of the Study.



Best affords have been given to make this Assignment informative, analytical, and comprehensive one. Nevertheless it challenges the following factors;


1. As being a employee of higher post and responsibility I have not get enough time to prepare this report.


2. Have to depend on the records of News papers, articles and internet sources.

3. Lacking of sufficient recorded documents and publications.

4. For some of my personal limitation there may be short cuttings in the report.













Chapter Five: Problem Statement.

The food price inflation had increased the poverty level. It has caused the poor families to reduce food intake and cut other expenditures. The share of food in household spending is very large among South Asian poor and low income groups. In Bangladesh, food price shock has increased Bangladesh’s poverty rate by around 3 percentage points. A World Bank survey finds nearly 8 percent of the surveyed households pulled their children out of schools to get jobs to assist their families cope with the crisis.



‘The World Bank is helping countries address the global price shocks. The World Bank Group created a new $1.2 billion rapid financing facility—the Global Food Response Program—in May 2008 to speed assistance to the neediest countries.’ said Vinaya Swaroop, Acting Country Director, World Bank Bangladesh, ‘Last Thursday we have signed an agreement with the Government of Bangladesh for a $130 million budget support under this facility.This credit will enable the Government to expand the social protection programs helping the poorest people dealing with rising food costs’.



Although the food price crisis has abated, it is very important that policy makers engage in dialogues to become prepared if such external shock recurs. For a developing country it is important to strike balance between the agricultural supply and social safety net programs. These shocks need to be properly managed to avoid permanent increases in budget deficits for countries in South Asia.



“The adverse effect of the rise in global commodity prices on macroeconomic balances has been substantial. South Asian countries have seen a sharp increase in fiscal deficits and a worsening in the balance of payments. For the first time in South Asia’s history all countries have simultaneously experienced double digit inflation rates, with 20 plus rates in Afghanistan, Pakistan and Sri Lanka. Economic growth is showing signs of slowdown.
The food crisis requires coordinated international response and financial support from the international community. It is particularly important that these resources be additional to existing development assistance and not crowd out support to other sectors, especially infrastructure, health and education.





























Chapter Six: Analysis of the Findings.


6.1. Rural inflation:

The quarterly inflation rates of import-concentrated commodities in rural areas are provided in Table 2 during FY06 - FY08. The point-to-point (p-t-p) inflation rates of import-concentrated commodities was significantly higher in the first half of FY06, around 12.1 percent in December 2005; which however slowed down in the second half of FY06. The inflation rates of import-concentrated commodities continued to decline until the first half of FY07 and reached 4.2 percent in December 2006 and then started to rise since the beginning of 2007. The inflation rate of import-concentrated commodities continued to soar up in FY08 and increased from 14.5 percent
in September 2007 to 22.0 percent in June 2008.


Point to Point Moving Average
General Food Non -Food General Food Non -Food
Sep 05 11.45 12.13 10.36 -------- --------- --------
Dec 05 12.09 11.97 12.29 ------- --------- --------
Mar 06 6.95 4.16 11.65 ----------- ---------- ----------
Jun 06 7.02 4.95 10.44 ----------- ---------- ----------
Sep 06 4.86 3.09 7.77 7.95 6.28 10.83
Dec 06 4.25 2.59 6.85 5.94 3.67 9.72
Mar 07 6.35 5.79 7.30 5.53 3.54 8.78
Jun 07 9.45 9.15 9.87 5.94 4.30 8.58
Sep 07 14.47 18.39 8.32 8.33 8.10 8.58
Dec. 07 21.89 31.28 7.50 12.07 14029 8.59
Mar 08 22.57 33.53 5.44 16.16 21.31 8.13
Jun 08 21.97 33.85 3.45 19.07 27.15 6.49

Table: Inflation of import-concentrated commodities in rural areas.
One interesting observation is that import-concentrated inflation rates (p-t-p) of non-food items dominated over food items in FY06 and FY07; however the situation reversed in FY08. While import-concentrated inflation rate of non-food items has been decreasing over the period, the corresponding rate in food items (p-t-p) has significantly jumped up in FY08 and climbed to 33.9 percent in June 2008. The assertion that can be made from this analysis is that import-concentrated inflation rates in rural areas are comparatively higher when food inflation outweighs non-food inflation significantly. Similar trends in the case of food and non-food items are also observed when inflation rates are estimated on the basis of moving average (MA). In this case, general inflation rate increased from 7.98 percent in September 2006 to 19.07 percent in June 2008, while food inflation increased from 6.26
percent in September 2006 to 27.18 percent in June 2008.



6.2.Urban inflation:

In the case of urban inflation, the trend of inflation rates, both p-t-p and MA, of import-concentrated commodities are similar to those in rural areas (Table 3). That is, import-concentrated inflation rates were higher in the beginning of FY05, then a declining trend is observed until end of 2006; however, the
rates started to increase since the beginning of 2007.




A few interesting points can be observed if one compares rural and urban inflation rates of import-concentrated commodities. First, in the case of general inflation, the volatility of inflation rate in rural areas is much higher than that in urban areas. This is mainly due to higher volatility in inflation rate of import-concentrated food commodities in rural areas than that in urban areas. This explains seasonality of food production in rural areas, shortage of food supply in rural areas due to natural disasters, and higher prices of food commodities in the international market. Second, while inflation rate of import-concentrated non-food items has been declining in rural areas, the corresponding inflation rate in urban areas is relatively stable. This is more likely to be the outcome of lower weights of these items in rural areas and lower expenditure on import-concentrated non-food items by the rural people. Third, inflation rate of import-concentrated items is higher in rural areas than that in urban areas, mainly due to higher food inflation rate of import-concentrated items in rural areas. Though inflation rate of food items in rural areas (12.5 percent) is lower than that in urban areas (13.2 percent), the situation is opposite in the case of import-concentrated inflation rates. This is due to the substitution effect of imported commodities. Usually, there is less availability of substitution commodities of imported food items in rural areas and thus rural people have to face higher prices of imported commodities. However, lower prices of domestically produced food items may force the overall inflation rate in rural areas to go down. On the other hand, urban people have more access to substitute commodities of imported food items and thus experience a lower food price. However, they have to face higher prices of domestically produced food items due to higher transportation cost of food commodities from rural to urban areas and higher producer prices at the domestic level, which force the overall food inflation rate in urban areas to go up compared
with rural food inflation.


6.3.National inflation :

Until August 2007, non-food inflation rates (MA) of import-concentrated commodities at the national level were higher than the corresponding food inflation rates (Figure 3). Afterwards, the situation is reversed and both increased at similar pace. It is interesting to note that non-food inflation rate of import-concentrated commodities slightly declined in FY07-FY08. Thus it is clear that overall inflation rate of import-concentrated commodities during FY07-FY08 have been dominated by corresponding food inflation rates.





Pass-through of inflation of import-concentrated commodities :

The estimation of inflation rate of import-concentrated commodities allows us to estimate the pass-through of import-concentrated commodities to overall inflation in Bangladesh during FY07 and FY08 (Table 4). The pass-through is defined as the ratio of import-concentrated inflation to overall inflation, considering corresponding weights in estimation. The estimated values confirm that the pass-through of imported inflation to overall inflation in Bangladesh has been increasing with higher contribution of import-concentrated food items than non-food items. The contribution of non-food inflation of import-concentrated commodities to overall inflation has been declining over the period. The trends are similar in both rural and urban areas. However, it is important to note that the pass-through of inflation of import-concentrated commodities is higher in rural areas than that in urban areas, mainly due to higher rural and food weights in the calculations.

Chapter Seven: Conclusion.


The analysis shows that recent inflation in Bangladesh has been dominated by higher prices of import-concentrated commodities, especially of food items. The dominance of import prices, especially in recent times, indicates the vulnerability of a small open economy, such as Bangladesh, to foreign inflation. Since the Bangladesh economy is a price taker in the world market, several policies at trade policy levels are important. For Bangladesh, tariff reduction has limitations due to its possible adverse impact on the overall revenue generation and on prices of domestic substitutes. More than 100 percent pass-through of import-concentrated food commodities reflects the limited availability of domestic substitutes and calls for expanding the availability of substitute commodities so that international prices cannot affect domestic consumer price levels so strongly. This also calls for appropriate policy actions pertaining to sustainable food production in the long-run, and easing up demand pressures adopting appropriate policies.
In the long-run, greater efforts are required to build a strong food security system by investing more in increasing agricultural productivity as the area of cropland is declining rapidly due to urbanization and other forces. Effective use of land must be ensured by using quality seeds, better production techniques, and taking steps against floods to ensure smooth agricultural production. In this regard, appropriate long-run fiscal measures are required in terms of higher expenditures on agricultural research, addressing issues pertaining to climate change on food security, and ensuring higher farm level prices to producers of agricultural commodities. The government can subsidize the import of agricultural inputs such as fertilizer and pesticides with the intention to stimulate domestic production of food and reduce reliance on imports.


--------------------------------------------------------------0-------------------------------------------------------------











Chapter Eight.-- Bibliography/ References.


Bibliography/ References:

1. ADB 2008. The Asia Economic Monitor 2008, Office of Regional Economic Integration, Manila, Asian Development Bank, July 2008.
2. Jhingan, M. L. 1997. Macroeconomic Theory, Delhi: Vrinda Publications (P) Ltd.
3. Mortaza, M.G. and S. Hasnayen, 2008, ‘Inflation Accounting Across Income Groups: Does Inflation Hurt the Poor More in Bangladesh?’ Bangladesh Bank Quarterly, 5 (3), pp. 30-41, January-March 2008.
4. Mortaza, M.G. and H. Rahman, 2008, Transmission of International Commodity Prices to Domestic Prices in Bangladesh, PN 0807, Working Paper Series WP0807, Policy Analysis Unit, Bangladesh Bank, June 2008.
5. Mujeri, K. M., G. Mortaza, and M. Shahiduzzaman. 2008 Trends and Characteristics of Recent Inflation in Bangladesh, Policy Paper 0901, Policy Analysis Unit, Bangladesh Bank, August 2008.
6. Taslim, M.A. and A. Chowdhury. 1995. Macroeconomic Analysis, Sydney: Prentice Hall.
7. Ter-Minassian, T., M. Allen, and S. Johnson. 2008. Food and Fuel Prices—Recent Developments, Macroeconomic Impact, and Policy Responses, Fiscal Affairs, Policy Development and Review, Research Department,International Monetary Fund, June 2008.
8. The Causative Factors of Inflation in Bangladesh—Rasheda Khanam & Mohammad Mafizur Rahman( Dept. of Management, University Of Chittagong.)

9. Policy Analysis Unit (PAU)-- Shamim Ahmed Md. Golam Mortaza(Bangladesh Bank.)

10. Editorials from Daily Newspapers of Bangladesh,
11. Various articles from internets.

Fishing Vessel Skipper.

NAVIGATION & NAVIGATIONAL AIDS

MAGNETIC COMPASS:
01. Why magnetic compass is not showing accurate heading when rolling but no rolling showing accurate heading?
02. When would you adjust and check the performance of magnetic compass
03. What are the care and maintenances of magnetic compass?
04. What is the suitable or ideal position of setting a magnetic compass in a fishing vessel?
05. What factors to be considered for adjustment of magnetic compass?
06. Why compass does not work at polar region?
07. Why the compass error is checked when/after major alteration of course?
08. Why regular comparison of standard compass, steering compass and gyro compass?
09. Why the compass errors are checked regularly?
10. Why comparison of gyrocompass, Standard compass and Standard magnetic Compass?

GRYO COMPASS.

1. State the meaning of Tilt, Drift, Precession, Control, Damping and Torque in connection with Gyro compass?
2. Describe how a free gyroscope turned into a Gyro Compass (Conversion of a free Gyro to a Gyro compass)?
3. What are the errors of Gyro compass? And how can you minimize them?
4 State the care and maintenance of Gyro compass?
5. List the setting or adjustment of gyro compass while in used or running?
06. How/What corrections for speed and latitude are applied to a Gyro Compass?

ECO SOUNDER.
1. List the false ethos of echo sounders. How it will be minimized?
2. Write the principal operation of echo sounder
3. What is the error of Error of Echo sounder?

GPS
1. Explain why GPS position can not be plotted on Navigational chart?
2. What is the principle of DGPS? And accuracy expected?
3. How GPS accuracy down grade?
4. What accuracy obtains of GPS?




SEXTANT.
01. What is sextant? Write the principles of sextant?
02. Describes the errors of sextant?
03. Write the care and maintenance of sextant?

RADAR
01. Draw the Block diagram of marine Radar?
02. How would you determine the accuracy of fixing by Rang Ring and Variable Range marker?
03. What Factors do the range accuracy depend?
04. List the false echoes on the Radar display?
05. Describe the various errors of marine Radar?
06. Describe various method of position fixing by Radar during coastal navigation?
07. How rain clutter affected a radar target when the target is before, within and beyond rain?
AUTO PILOT.
01. List the adjustment controls fitted with an auto pilot and state the use of each.
02. When and how auto pilot should be tested?
OTHERS.
01. Write principles of Doppler Log.
02. Write short notes on:
1. Weekly notice to mariners
2. Cumulative admiralty Notice to Mariners.
3. Annual Summary of Admiralty Notice to mariners.
4. VDR.
5. AIS
6. Ships security Alert System.
7. ISPS Code
8. PSC
9. ISM
10. CSR.(Continuous Synopsis Record.)


03. Describe the relationship between tide and Phases of The Moon?
04. What is the danger of placing implicit reliance of floating navigational aids?
05. Write the principle of electro magnetic Speed Log.
06. What is ambiguity? Describe with sketch.
07. What is M.P.? Describe with suitable Sketch.
08. What is plane sailing? Describe with suitable Sketch.



MARKS DISTRIBUTION ANALYSIS.
1. MATH.
a. Intercept/Long by chronometer.
b. Great circle sailing/Mercator Sailing.
c. Steller/Staggered observation
d. Lat by Meridian/Ex-meridian altitude.


2. CHART WORK.
I. Passage planning.
II. Current and Lee way.
III. Tides. (Primary/Secondary port.)


3. Navigational Aids:
A. Radar.
B. Echo Sounder.
C. GPS.
D. Magnetic Compass.
E. Gyro Compass.
F. Sextant.
G. Auto Pilot.


4. OTHERS.
i. Doppler Log.
ii. Relationship between Tide and Moon.
iii. Publications
iv. ISPS Code.
v. ISM, PSC, VDR, CSR.