Ban on edible oil futures won't help: Abhijit Sen

At a time when the Left parties are calling for a ban on futures trading in edible oils, Abhijit Sen, chairman of a committee on futures trading of essential commodities, says such a ban would not help in bringing down domestic prices of edible oils.

"Half of our edible oil is imported. In any case, there is hardly any trading in edible oils in Indian commodity exchanges, which are not imported. Only there is substantial trading of soyabean oil in the country," Sen told Business Standard today.

Of the annual consumption of around 11 million metric tonnes (mmt) of edible oil, India imports around 4 mmt of palm oil and 2 mmt of soyabean oil. The monthly trading of edible oil in 2007-08 in Indian commodity exchanges averaged 2.2 mmt.

"Stopping futures trading on soyabean oil will also not help. Domestic soyabean oil prices are going to be determined mainly by futures trading of edible oils in other markets. Palm oil is being traded in Malaysia and soyabean oil in America. Our futures are simply reflecting our trade policy. Otherwise, the data is being gathered from the Kuala Lumpur or American exchanges," he added.

The government on Monday allowed import of crude edible oil at zero import duty and refined edible oil at a duty of 7.5 per cent.

When asked whether the submission of the futures trading report would not have helped in clearing the air in the present context, Sen said, "I think it would have. But unfortunately, I have not been able to submit the report. I will do it next week. More or less, everything is ready."

However, Sen denied the committee was under any pressure to delay the report as it may further worsen the government's relation with the Left parties. "That is certainly not true. There were some problems in the data used for which the report could not be submitted," he clarified.

The government had suspended futures trading in tur and urad from January 24, 2007, and in wheat and rice from February 28 last year.