KOCHI (Commodity Online): A connection between commodity futures trading and inflation in the Indian economy has not been conclusively established, however, commodity exchanges will have to be extremely sensitive to complaints emanating from various parts of the country, especially from the farming community on the issue, according to Prof K V Thomas, Union Minister of State for Food, Consumer Affairs and Public Distribution.
Delivering the inaugural speech after unveiling the new 'Commodity Online' trading brand and logo here on Saturday, Prof Thomas said that one of the seriously debated topics in the winter session of Parliament was the issue of inflationa and hike in food prices.
"Speakers after speakers who took part in the discussion in Lok Sabha and the Rajya Sabha, especially from the opposition benches, which I sat through, have singled out forward marketing and futures trading in essential commodities as one major contributory factor for the price situation. While the stated position of the Government is that an apparent connection between the futures trading and the rise in inflation could not be established and that is the finding of the Expert Committee set up under Prof. Abhijit Sen. I am sure that Commodities Exchanges would have seriously introspected on this matter. Let me also share that I get a large number of representations from all parts of the country citing examples of guarseed or pulses as indicative of impact of futures trading in escalating prices of these commodities. Let me assure that while Government is open to the whole concept of commodities exchange and futures trading as a major economic activity in tune with international market integration, the exchanges will have to be extremely sensitive to the complaints emanating from various parts of the country, especially from certain sections of the farming community," Prof K V Thomas said.
The Minister pointed out that the Union Government and the Kerala Government recently had interactions with the rubber traders on the influence of futures markets in rubber price volatilities. The government has decided to set up an expert committee to study various aspects of the issue, Prof K V Thomas said.
India as a country with two-third of population depending on agricultural commodities, the relevance of commodity futures trading needs no emphasis. We have “Commodity Futures Markets´ in India for mitigating price risks arising in the commodities markets which act as price barometer to various stakeholders of the commodity supply chains. “The Commodity Futures Market” in India comprises National and Commodity Specific (Regional) Commodity Exchanges which perform the critical economic functions of price discovery and price risk management. The price signals – futures prices – emanating from the exchange platform indicate the traded value of the underlying commodity. The prices discovered on the Exchange are driven by commercial decisions on supply and demand. However, our commodity market is still under-developed and therefore offering huge scope for progress in the sector. Development in the sector is expected to contribute significantly in strengthening Indian economy and the agricultural field in particular, to face the challenges of globalization.
Mr Jignesh Shah, Vice Chairman of Multi-Commodity Exchange of India and Chairman and CEO of Financial Technologies Ltd launched the new bullion portal developed by Commodity Online, Bullion Street . In his Keynote Address, Mr Jignesh Shah pointed out that historical records prove that India gained signficantly through international commodities trade from ancient days. When MCX launched gold and silver futures in 2004, gold prices were hovering around $350 per ounce levels and which has now climbed to $1700 levels and jewellery manufacturers have benefitted by hedging in the futures platform, he said.
Mr George Iype, Managing Director of Commodity Online Group, welcomed the gathering and Mr Binu Alex, Director (Research) delivered a vote of thanks. The event was attended by over 250 traders, investors, businessmen and the media.
