NEW DELHI (Commodity Online): Influential political parties in India continues to oppose lifting of ban on futures trading in a few commodities as the policy makers have failed to create awareness among the masses about the benefits derived by producers and consumers from futures trading in the past.

The views were expressed by B C Khatua, Chairman, Forward Markets Commission and Rajiv Agarwal, Secretary, Department of Consumer Affairs the other day at a national conference on Future of Commodity Futures Market organised by Associated Chamber of Commerce and Industry (ASSOCHAM)

Both Agarwal and Khatua said that “influential political opposition” continued to persist in favor of ban on futures on suspended commodities, especially urad, tur and sugar because of widespread prevailing perception among masses that futures trading in them have led to price rise.

Agarwal and Khatua alleged that system has failed to create sufficient awakening among masses that futures trading in commodities have on the contrary benefited their producers and consumers in the past. Since due to involvement of intermediaries, prices of essential commodities have risen so abnormally that the blame by mistake fell on futures trading in commodities for rising prices, jointly concurred the Consumer Affairs Secretary and Chairman FMC.

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“Since erroneous impressions go on intensifying that futures in commodities have resulted into price rise, the political class is still swayed by the public opinion and until this mis-perception is removed, no time limit can be prescribed for lifting ban on futures trading in commodities”, categorically stated Mr. Khatua.

Because of this false impression, the differential between wholesale and retail prices is abnormally higher and retailers need to shrink their margins to provide relief to consumers from price rise as supplies have started picking up, he added.

Khatua went to an extent of alleging that in chana dal despite futures trading not suspended, it’s price has remained more or less stable as against urad and tur in which future trading is suspended, their prices have soared much more. This comparison goes to prove that futures trading should be re-introduced so that consumers, farmers are benefited and intermediaries punished, he clarified.

Khatua even blamed the government for making conservative estimates of demand of essential commodities like grains, cereals and even pulses that caused price rise and hurt the common man.

The Consumer Affairs Secretary also alleged that price rise has happened because government has not been able to extend autonomy to Forward Market Commission which regulates commodities in futures. It has also happened because the existing system of procurement is not efficient and transparent enough for effective procurements, he added.

Prof. Abhijit Sen, Member Planning Commission who gave a keynote address on ASSOCHAM organized Conference recommended integration of futures with spots as also advised that their should be a single regulator for commodities and warehousing. The recommendation of Prof. Sen in this regard was endorsed by Consumer Affairs Secretary and Chairman FMC as single regulator is necessary to effectively regulate commodities and warehousing.

Among others who spoke on the occasion and lobbied hard for re-introduction of futures in suspended commodities including sugar comprised P K Singhal, Dy. Managing Director, MCX,. Jayant Manglik, President, Religare Commodities, S K Jindal, Chairman ASSOCHAM Investment Protection Committee and D S Rawat, Secretary General ASSOCHAM.

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