Date:28/08/2007 URL: http://www.thehindubusinessline.com/2007/08/28/stories/2007082850181400.htm

Back Futures trading: Panel report by mid-Sept

Suresh P. Iyengar

Mumbai, Aug. 27 While the Abhijit Sen committee report on the futures trading in wheat, rice, tur and urad is awaited, there are indications in the trade circle that the panel may skirt the issue in its submission.

The panel was set up to examine whether forward trading in essential commodities has had a direct impact on prices and also if the ban on futures trading in rice, wheat, tur and urad can be lifted.

“The committee had prepared the draft of the report. It will be circulated among the members of the committee. After receiving their views, it will meet again and take a final view on the matter,” said Mr B.C. Khatua, Chairman, Forward Markets Commission. “We had reiterated our stand that commodity futures trading cannot impact spot prices. It is, in fact, the other way round. We expect the report before mid-September,” he added.

Meanwhile, commodity exchanges have made many presentations stating that wheat, urad and tur prices have not fallen after futures trading in them was banned.

The Centre banned futures contract in tur and urad pulses in January, while wheat and rice futures ban was imposed by the Union Finance Minister, Mr P. Chidambaram, while presenting the Budget. The Government took the extreme decision following persistent demands by various political parties who felt that it was leading to spiralling of agri-commodities prices. “We don’t expect any adverse reference on commodity trading from the Sen Committee report, because there is no evidence to prove that futures trading is fuelling spot prices,” said Mr Harish Galipalli, head of research, Karvy Commodities.

Mr Chidambaram, while imposing the ban, also announced the formation of the committee on the recommendations of the Parliamentary Standing Committee on Consumer Affairs, Food and Public Distribution. Planning Commission member Mr Abhijit Sen chairs the committee. Other members include Rajya Sabha member Mr Sharad Joshi, Forward Markets Commission member Mr Kewal Ram, besides Mr Prakash Apte of IIM-Bangalore and Mr Siddharth Sinha of IIM-Ahmedabad.