Government unlikely to ban futures trading in food items

July 30th, 2008 - 7:03 pm ICT by IANS  

New Delhi, July 30 (IANS) Agriculture Minister Sharad Pawar Wednesday hinted that the government was unlikely to “ban or discourage” futures trading in food commodities in the country. “It was a conscious decision of the previous government to have futures trading, and should be strengthened. It is being maintained even in the current regime,” said Pawar.

Asked if the government was considering withdrawal of the ban on futures trading in commodities like soya oil and potatoes, Pawar said there was currently no move in that direction.

“We will see if there were any impact of banning futures trading in some commodities in containing their prices. We have time to decide whether the ban should be lifted or not,” Pawar told reporters on the margins of the 24th annual meeting of Central Consumer Protection Council (CCPC) here.

The Congress-led United Progressive Alliance (UPA) in May banned for four months futures trading in soy oil, potatoes, rubber, and chickpea.

It also banned futures trading in rice and wheat in March 2007 to contain skyrocketing prices of essential commodities, particularly of staple food grains.

The decision was taken after various political parties, including UPA’s former allies the Left, demanded measures to rein in inflation, currently pegged at 11.89 percent for the week ended July 12.

The Parliamentary Standing Committee on agriculture, headed by Ram Gopal Yadav, has suggested discouraging futures trading, and setting up a regulatory authority for forward market trading on the lines of Securities and Exchange Board of India (SEBI).

In futures trading, there is usually a contract which is essentially an agreement between two parties to buy or sell an underlying asset at a certain time in the future at a certain price.

A futures contract usually has a standardized date and month of delivery, quantity and price.

Posted in Politics |