The Standing Committee, looking into the Forward Contracts (Regulation) Amendment bill, 2006, gave its report in which it suggested a constitutional amendment that puts in the Union or Concurrent list and under one regulatory framework the spot and commodity market.
Presently, stock exchanges and future markets are in the Union list whereas trade and commerce and agriculture are in the jurisdiction of states.
"As such the regulators of commodities exchanges does not have jurisdiction over spot markets which are under the ambit of the state government," the panel said while underlining the need to balance the interests of both the producers and consumers.
The panel's report was long awaited by the government. In fact, Congress President Sonia Gandhi often underlined to her MPs the need to get the panel to expedite its report on Forward Trading which is expected to regulate and stabilise prices of agricultural commodities, check speculation and ensure that farmers do not become a victim of the market.
Taking into consideration the interest of the farmers and the small investors, the panel felt that the enabling provision in the bill that allows foreign investors in the commodity market should be removed.
It said that hedge funds, banks and PF should not be permitted to participate in the commodity market.
It also proposed that that the officials of the central ministries should not be appointed to the Forward Markets Commission.
Instead, it should persons of ability and standing who have dealt with the problems of commodity market as well a person from the farming community. It saw no need to grant any wealth tax and income tax to the Commission, especially when the mechanism is a purely commercial organisation and the Finance Ministry is trying to widen its tax net.