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No plans to ban more goods from futures mkt

The Govt says it does not plan to ban any more farm commodities from future trading adding the ban on trading soya oil, potato might not be extended in the future, reports Jatin Gandhi.

business Updated: May 12, 2008 20:30 IST
Jatin Gandhi

The government said on Monday it does not plan to ban any more farm commodities from futures trading adding that the four-month ban on trading soya oil, potato, rubber and gram might not be extended in the future.

"I don't think any new commodities will be added," Sharad Pawar, Minister for Agriculture and Consumer Affairs said.

The government had suspended futures trading of the four commodities last week for a period of four months, as part of measures to control inflation. "I think that the decision is taken only for four months. I do hope time will not come to extend the four months period," Pawar said.

He added that the ministry would wait and watch to see the impact of the ban.

A ban on futures trading in rice, wheat, tur dal and urad dal has been in place since last year, now. Of the four, prices of two items stabilised while rates of other two commodities increased in spite of the ban, Pawar said. With last week’s decision, eight commodities have been banned for trading in the futures market.

The Abhijit Sen Committee, which submitted its report to the government last month, had said it could not conclusively say whether futures trading had resulted in increased commodity prices. It said the time period for which the futures market has existed in India, was too short to ascertain the effect of futures trading on agricultural commodity prices. In 2003, futures trading was allowed in the last group 54 prohibited commodities.

Sen, who chaired the committee, had in a separate note, suggested: "Suspension of futures trading in the four sensitive commodities should continue and, in the case of sugar and edible oils, discussions with processors held on how much hedging benefits they currently derive from futures markets, and a decision taken accordingly."

Pawar said the decision to suspend futures trading was taken by the Forward Markets Commission (FMC) after studying the situation. "The decision was taken by FMC. They have applied their mind and ultimately came to this conclusion," he said.