December 02, 2008

Futures trading not fueling prices – Expert panel

FE reported that an expert committee, whose report is being awaited by the government to decide whether futures trading on essential commodities be banned, has found no firm evidence that such trading was leading to rise in prices.

The committee's draft report said that "It cannot be concluded emphatically whether future trading has in anyway fueled increase or volatility in prices of agricultural commodities."

The committee pointed out that blaming the commodity market for fueling inflation is not unique to India and it is a global phenomenon and markets get accused in the developed countries such as the US.

In view of criticism about futures trading, the report said it is essential to minimize the potential adverse impact of futures trading on prices of agricultural products. It added that "Well functioning futures markets have the potential of bringing about price stability over medium to long term."

It may be noted that the centre had set up an expert committee under the chairmanship of Planning Commission member Mr Abhijit Sen to study the impact of futures trading on prices of agricultural commodities. Mr Sen said that he would submit the report this week for which the draft was circulated among the members of the Panel on Saturday.