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No proposal to ban futures trading in food items: Thomas

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SummaryTrading in futures exchanges are currently done in 24 food items, including wheat, sugar, and crude palm oil.

The government does not propose to ban futures trading in commodities as it has no role in the recent rise in prices of certain food items, Parliament was informed today.

"The central government does not propose to ban futures trading on any commodity that is currently in the futures exchanges," Food minister K V Thomas said in a written reply to the Rajya Sabha.

Trading in futures exchanges are currently done in 24 food items, including wheat, barley, gram, sugar, potato and crude palm oil.

Thomas said the recent spike in prices has been witnessed in food items such as vegetables, meat, milk, fish and fruits which are not traded at the commodity futures exchanges.

He said the Reserve Bank in its Annual Report (2009-10) had stated that commodity prices in the country seem to be influenced more by the drivers of price changes, particularly demand-supply gap in specific commodities, the degree of dependence on imports and international price movements in the these commodities rather than future trading.

The minister said that a strategic reserve of 30 lakh tonnes of wheat and 20 lakh tonnes of rice was created in 2008-09 in addition to existing buffer stock norms.

While India's norms on buffer stocks and strategic reserves require stocking 32 million tonnes of food grains, Food Corporation of India (FCI) and state government agencies have stockpiled 61 million tonnes 35.6 million tonnes of wheat and 24.9 million tonnes of rice.

homas, however, denied any move for strategic reserve of pulses to check its prices.

"India being a chronically deficient nation in production of pulses, hence there is no proposal to create strategic reserve of pulses. The mismatch between demand and supply is in fact covered by imports," he said.

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