NCDEX chief flays stock limit norms

The decision to introduce stock limits on wheat and pulses is contrary to India's plan to move towards a common agricultural market, said P H Ravikumar, managing director and chief executive officer of National Commodity and Derivatives Exchange (NCDEX).

"There were (government) statements that by 2010 India would be a common agricultural market. But, state governments are imposing stock limits. This is a completely opposite strategy," Ravikumar opined.

Worried by an upturn in prices of essential commodities, the central government restored powers of state governments to set stock limits and restrict movement of these commodities to check prices.

Thereafter, Maharashtra notified stock limits on wheat and pulses on September 12, while many states, like Delhi, Gujarat, and Andhra Pradesh, have expressed intentions to do so.

Ravikumar said imposing stock limits could be counter-productive, as stocks of the commodities would not enter states that have imposed these limits.

For example, in a state like Maharashtra, no wheat will come in because of these limits. Wheat will remain in Madhya Pradesh and Gujarat, he said.

"States of Punjab and Haryana have not imposed stock limits on foodgrains and pulses, as they have realised that such a move could be counter-productive," said the NCDEX chief.