NEW DELHI (Commodity Online): Defending its decision of putting a ban on the futures trade in sugar, the Indian government today termed the futures trade as a main aspect behind the exogenous price rise. In a statement issued today, the agriculture ministry said that it had responded immediately to check growing prices of sugar by taking steps like suspending futures trading in sugar in domestic exchanges.

The government had put a ban on the sugar futures trading in domestic exchanges with effect from May 27, 2009 to curb any possible speculative tendency in sugar prices. The ban is in force up to September, 2010, it said adding there have been continued decline in the prices of sugar from Rs.47 per kg on January 15 to Rs.39 as on 3rd March, 2010.

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It may be pointed out that the Forward Markets Commission, the official regulator for future trading, had last month criticized the government and "political class" for banning futures trade in sugar by saying such a decision often have "horrendous" impacts. FMC chairman B C Khatua also had attributed overwhelming "ignorance" revolving around futures trade for such decisions.

Among other steps to control sugar prices, the statement said the government had also acted decisively by directing the sugar mills to sell and dispatch non-levy sugar quota on weekly basis, ordered reduction in the stockholding limit of bulk consumers and gave permission for sale of imported raw sugar.

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