Political pressure behind futures ban: Chidambaram

May 23rd, 2008 - 2:09 am ICT by admin  

A file-photo of P. Chidambaram

New Delhi, May 22 (IANS) The United Progressive Alliance (UPA) government was forced to ban futures trading on some items because of political pressures even though there was no rationale for doing so, Finance Minister P. Chidambaram has said. “I agree there is no conclusive evidence that banning futures trade has any impact on prices,” the finance minister said in an interview.

“But it was that very committee, not I, who said we should continue the ban on the four items - rice, wheat, toor and urad,” the finance minister told Tehelka, referring to the recommendations of the Abhijit Sen Committee on futures trading.

He said if the parliamentary standing committee, the opposition and the people in villages start blaming futures and commodities trading as a reason for price rise, the government had to heed the advice of the majority.

“That is what we have done. I am reasonably satisfied this ban will have no impact on the prices of these items but sometimes you do certain things that may have no positive impact, but hopefully no negative impact either.”

In the free-wheeling interview, the finance minister also maintained that while there was no reason to believe that organised retail trade will wipe out the neighbourhood stores, the fear among people was genuine.

“There is no empirical evidence to show mom-and-pop stores will be wiped out if retail chains come - for example, Walmart. I met its chairman the other day and he said their 47th store has opened in China and there’s no evidence mom-and-pop stores in China are being wiped out,” he said.

“But still, the fear is genuine, and it is the duty of the government to allay that fear. And until it is completely removed we are moving slowly, cautiously. We are not saying the fear is unjustifiable,” he said.

“That is why we have opened only wholesale, cash-and-carry and single brand retails. We have not yet opened multi-brand retails.”

Chidambaram admitted that the state had some responsibility in the Naxal problem being faced in some areas where its proponents were thriving on the poverty and illiteracy of the tribal people.

“The state owes a responsibility here because it has not paid enough attention to the development of those areas, nor has it respected the democratic rights of those people. The State today is seen to be in conflict with the tribals,” he said.

“The Naxalites and Maoists are seen as allies of the tribals. But the answer to the state’s failure is not to encourage left-wing extremism. We have to fight the Naxalites and at same time the state has to be more sensitive to the welfare of the tribals.”

The finance minister also came down heavily on the diversion of food crops to make bio-fuels and said it was totally unjustified, especially when there was a global shortage of food.

“You grow food to consume it as food. You don’t grow food to be converted into fuel. Twenty percent of US corn is being diverted to fuel,” he said, adding: “How is this justified in a world where millions of people are still going without food?”

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