Futures trade not responsible for inflation, says Ncdex chief

Blaming futures trading in commodities for rising prices was misplaced as the non-exchange traded goods had contributed more to inflation than those traded in the exchanges, P H Ravikumar, chief executive officer and managing director of the National Commodity and Derivatives Exchange said today.

"We have made a detailed presentation on futures trading and its impact on prices to the expert panel headed by Abhijit Sen," Ravikumar said.

In a study undertaken by the exchange, it was observed that the prices of wheat and pulses were rising due to supply constraints, he added. Earlier this year, the government had banned futures trading in urad, tur, wheat and rice to keep a check on the prices.

The expert panel, set up by the Centre to study the impact of futures trade on prices of farm commodities, is scheduled to submit its recommendations by the May-end. Ravikumar's statement assumes significance as the standing committee on food, consumer affairs, and public distribution on Friday reiterated that futures trading in all essential commodities be banned.

The committee observed that the objective of futures forward trading is to help farmers in price discovery and price risk management, but small farmers were not able to reap the benefits.

"Farmers have largely benefited from futures trading," Ravikumar said, quoting case studies prepared by Haryana Marketing Federation, National Institute of Agricultural Marketing, Jaipur, and Institute of Agri-Business Management, Bikaner.

He said wheat farmers have got better prices on account of futures trading, at least Rs 20 higher than the minimum support price (MSP). Ravikumar said futures trading can even help the government in its procurement operation by timely import decision can be made by monitoring wheat futures closely, MSP can be fixed based on the harvest month futures price and Food Corporation of India can buy wheat on commodity exchanges if there is a deficit in procurement.