Forward Markets Commission (FMC) Chairman B C Khatua today said there was a need to make Indian farmer more powerful and let him decide his own course.
While addressing the third annual Leadership Summit on The Future of Financial Markets 2011, organised by the Financial Technologies Group, he said he was more worried about the challenges over and above the fact that FMC did not have requisite powers and the main challenge was empowering farmer. He said FMC enjoyed more functional autonomy than many other regulators in the world, as the Union Ministry of Consumer Affairs had delegated most powers.
“The regulator not having enough powers is an issue that needs to be addressed by giving it strong legally grounded autonomy. But from the market point of view, there are several other things that are needed,” he said.
FMC does not have powers to derecognise exchanges and penalise members of exchanges. According to him, educating market participants is a bigger challenge. While recognising the importance of the bill pending before Parliament seeking to give more powers to the FMC along with the introduction of new instruments, he said farmer was a mute spectator when he came to mandis to sell his produce. Despite the fact that he has capability to set prices, he has become a price taker. This mechanism should change or new age markets should ensure that farmer becomes more powerful.
When commodity prices go up, people cry foul to support consumers whose interests are affected, however when prices fall, no one worries about poor farmers.
Describing other challenges, Khatua said in past whenever futures market had indicated price rise, “we have informed the government about this and suggested measures as futures give signals in advance. However, taking cues for policy decisions from futures market efforts were made to blame the market for rising prices.”
Even a week ago, Khatua said the government was almost on the verge of banning futures in half a dozen commodities in the name of ‘improving perception about rising prices’. Some better sense prevailed and decision was taken not to ban futures.
