Trashing own panel, Govt bans futures in four more

Futures trading in rice, wheat, tur and urad were suspended by the FMC earlier.

This flies in the face of the Abhijeet Sen expert panel that told the Government barely a week ago that futures trading had little impact on either spot prices or inflation and a ban would end up hurting farmers.

But, sources said, the worse is not over. The Cabinet is likely to consider harsher steps in its meetings scheduled this week. Strong political and business lobbies against futures in non-agri products such as bullion are actively pushing for a complete ban on commodities trading, they said.

Just three days ago, Finance Minister P Chidambaram had said in Madrid that India may have to consider banning some more products to arrest inflation if Parliament wants it. “The pressure is to suspend a few more food articles,”’ he said in an interview without identifying the products. “It may be politically wise to do that for a short period to see if it has any impact at all on inflation.”

Chidambaram’s comments came in for sharp criticism from many quarters including the Asian Development Bank. Deputy Chairman Planning Commission Montek Singh Ahluwalia too noted there was no relationship between futures and inflation.

With the government vertically split on the issue, the commodities futures market, which had taken off just three years ago, now seems to be heading for a crisis. In the Budget this year, the finance ministry also imposed a transaction tax on commodities futures trading, which India’s two biggest exchanges NCDEX and MCX said would export the market to foreign countries.

When contacted, Anupam Mishra, director, FMC, confirmed the suspension of trading in the new set of commodities for four months. Sharad Joshi, founder of Shetkari Sanghatan said, “In the government’s definition of inclusive growth, there are more who fight against freedom for farmers than those fighting for freedom.”

Recently, UP Chief Minister Mayawati raised the issue of potato growers in her state getting a raw deal in the spot market where potato was selling for about Rs 2 a kilo then compared with Rs 6 a kg in the futures market.