Panel on futures trading not to recommend ban

April 23rd, 2008 - 9:37 pm ICT by admin  

A file-photo of P. Chidambaram

New Delhi, April 23 (IANS) A high-level committee set up to study the impact of futures trading on commodity prices will not suggest banning such transactions following sharp differences among its members. The members of the committee, who met here Wednesday, decided that they will submit their individual notes on futures trading before the collective report of the Abhijit Sen panel is presented to the government April 27.

“I am a champion of futures trading. I firmly believe farmers stand to gain from futures trading. The meeting decided that all members should enlist their views and prepare a common minimum report,” said Sharad Joshi, one of its members.

“The terms of reference do not include any obligation to make recommendations on the future of futures market and we don’t have to say anything about whether it should continue or not,” said Joshi, also a Rajya Sabha member.

“We found an acceptable way of expressing the differences in opinion,” said Sen, a Cambridge educated economist and a member of the Planning Commission, without elaborating.

The other members of the committee include Siddharth Sinha, a professor at the Indian Institute of Management (IIM) at Ahmedabad, Prakash Apte, professor at IIM-Bangalore and Kewal Ram, member of the Forward Markets Commission.

The decision of the committee comes against the backdrop of Planning Commission Deputy Chairman Montek Singh Ahluwalia maintaining that there was no proof of a linkage between futures market and inflation.

“That prices rise - or do not rise - is not at all connected with whether there is a futures market or not,” Ahluwalia said Tuesday, adding even in China that had an active futures market, the link with inflation was not supported.

“We should not ban it. It will be a serious mistake.”

The Sen committee was set up after Finance Minister P. Chidambaram said in his budget speech that the impact of futures trading on prices of essential commodities would be examined thoroughly by experts.

A section of the government, as well as the Left parties, have been demanding a ban on futures trading to bring down prices that have pushed India’s inflation rate to 40-month-highs of over seven percent.

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