Pawar for return of wheat & rice futures trade
Agriculture, food and consumer affairs minister Sharad Pawar has said the time is ripe for removing the ban on futures trading in wheat and rice.
By Prabha Jagannathan, TNN |
NEW DELHI: Agriculture, food and consumer affairs minister Sharad Pawar has said the time is ripe for removing the ban on futures trading in wheat and rice. He also feels the government should not delay permission for foreign direct investment (FDI) in commodity exchanges.
“I think it may be time to consider removing the ban on select commodity trading imposed earlier,” Mr Pawar told ET on Thursday. “I am keen to see a decision on FDI in the commodities market at the earliest,” he added.
“There are many things that are required to be done on the commodities market still,” Mr Pawar acknowledged. His statements come at a time when the committee, headed by Planning Commission member Abhijit Sen, is gearing up to submit its long-awaited report on aspects of commodity futures trading to the food & consumer affairs ministry within the next fortnight.
“I spoke with Professor Sen today and he assured me that he was ready to submit the report in two weeks,” Mr Pawar said, pointing out that wheat production this year was likely to go past the 75-million-tonne mark. Production stood at 74.89 million tonnes in 2006-07.
The food ministry is understood to have received final output projections for 2007-08 Rabi earlier this week. Clear indications were that we have gone past the 75-million-tonne mark, Mr Pawar said. “It is true we may not been able to procure amply for the Centre’s buffer. However, prices have remained steady at around Rs 1,100 per tonne despite high import prices and that means that there was sufficient supply to meet domestic demand,” he added.
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Mr Pawar’s stand on the eagerly awaited FDI investment in commodity exchanges comes against a backdrop of apprehensions that the guidelines from the Reserve Bank of India (RBI) on FDI investment in commodity exchanges may not be notified before March next year.
Mr Pawar’s stand, therefore, could spell good news for commodity traders, particularly in view of the prevailing perception that the RBI is meting out a step-motherly treatment to commodity exchanges, when compared with stock exchanges, as far as FDI policy is concerned. The move is seen to to be choking the growth of Indian commodity exchanges further by denying a level-playing field with stock exchanges.
Wheat, rice, tur and urad dal futures were banned in the commodities market in the wake of high essential commodity prices from the end of 2006, in response to pressure from Left parties.
Perhaps in sync with Mr Pawar’s views, the Sen panel report is expected to take a “positive” view of futures trading in agri commodities. Indications are that it will skirt any direct references to the ban on forward trading in these commodities but stick to a generally positive tenor on allowing commodity futures to flourish. That should pave the way for the removal of the trade bans sooner than later.
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The Sen panel has had several extensions since its constitution in March 2007. The panel is said to have readied its report as far back as November 2007 but is believed to have witheld it on account of political sensitivities.
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