Gargi Parsai

NEW DELHI: A committee led by Planning Commission member Abhijit Sen, which has been set up to study the impact of futures trading on prices of farm commodities, has come up with divergent views by four of its members in addition to common recommendations. It submitted its report to Union Agriculture Minister Sharad Pawar here on Tuesday

The panel was set up on March 2, 2007 after the government decided to ban futures trading in wheat, rice, tur and urad following a sudden escalation in their prices, which was attributed to trading in the futures market.

However, the panel did not suggest whether the ban should stay or go or be expanded to cover other agriculture commodities. In his individual note, Chairman Abhijit Sen has recommended that the current ban on futures trading in four commodities should continue.

‘Negative subsidy’

While noting that there was no indication of “unambiguous direction of impact” between futures and spot prices, the panel member Sharad Joshi said, “The tirade against the futures market started taking socialistic overtones and supporting the demand would mark the return to the days of low-cost economy and imposition of negative subsidy on farmers.”

Another member Prakash Apte of the IIM Bangalore said it was “illogical to argue that futures markets are a channel for global factors to influence spot markets.”

Committee member Sidharth Sinha of the IIM Ahmedabad noted that “futures trading having an adverse impact on wholesale and retail prices cannot be used as a basis for continuing delisting of futures contract on certain commodities.” According to him, the weaknesses in the functioning of the futures market required their improving, not banning.

Member of the Forward Markets Commission Kewal Ram was the Member-Convener of the Committee.