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18 December 2009 at 17:30 IST
India's agri minister defends futures trading
NEW DELHI (Commodity Online): Futures trading has not caused the surge in commodity prices as some commodities whose trading was banned in commodity exchanges since 2007 have seen their prices surge recently, Prof K V Thomas, Minister of State for Agriculture informed the Rajya Sabha. India's commodity exchanges have seen a surge in trading volumes in 2009 thanks to rising interest in agricultural commodities.
Prof K V Thomas cited the example of urad and Tur whose trading in futures stands suspended since January 2007. But the prices of these commodities are showing sharp increase during 2008-09 and 2009-10. The year-on-year price increase (in terms of Wholesale Price Index) at the end of financial year 2008-09 (29.3.2009) was 14.7% for Urad and 17.1% for Tur. During the year 2009-10 (as on 28.11.09). Year-on-Year increase was 59.46% and 72.25% for Urad and Tur respectively.
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As against this there is futures trading in Gram. Year on Year change of prices of Gram was negative at –6.8% in 2008-09 and 4.32% during 2009-10 (as on 28.11.09) respectively. Therefore, the increase in prices of commodities need not necessarily be attributed to future trading. In fact an Expert Committee appointed by the Government under the Chairmanship of Planning Commission’s Member Prof. Abhijit Sen to examine whether futures markets was responsible for rise in the prices of essential commodities in its report submitted in April 2008 did not find futures market responsible for the increase of the prices of essential commodities.
The turnover of 23 commodity exchanges in the country surged by 42.63 per cent to Rs 47,29,971 crore till November this fiscal on the back of significant improvement in agricultural and other commodities segment, the Forward Markets Commission (FMC) said. The turnover has increased to Rs 47,29,971 crore during April-November from Rs 33,16,206 crore in the same period last year, Over 90 per cent growth in agricultural and other commodities segment has pushed up the total turnover. Besides, the launch of the fourth bourse ICEX also contributed to better figures, it said.
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