Assocham seeks ban on futures trading in agri commodities

Industry body Assocham has called for a temporary ban on futures trading in agri commodities with a view to arrest the price inflationary trend in the country. It has also called for a temporary ban on agri exports.

Releasing a study, India ?s FTAs and Indian Industry, here on Saturday, Assocham president Venugopal N Dhoot said, ?The price inflation has touched a 40-month high level of 7% for the week ended March 22. It is a matter of grave concern as it may eat into the benefits of the growing economy. Our economy should grow well over 9%. Futures trading in agri commodities should be banned for sometime till the situation improves. I am confident that the situation would improve by August, this year.?

He also suggested that the government should take measures like banning exports of agri commodities to increase its availability in the country. If necessary, the government should subsidise some essential commodities and facilitate smoothening of its distribution. Dhoot also urged that the Reserve Bank of India should take steps to increase the bank interest rate and the cash reserve ratio (CRR) as these measures would help to contain the price inflationary trend.

Regarding the proposed free trade agreements (FTAs), which India has planned to sign with other countries, Dhoot said that industry should be taken into confidence before the final deal. ?We are in favour of trade, but the deal should be designed in such a manner so that it turns out to be a win-win situation for both parties. We want that a preferential trade agreement (PTA) should be signed before an FTA.?

He said that India should be careful in signing FTA with China as that country ?enjoys an added advantage of keeping its currency devalued under a different condition.? He said that India with a higher tariff regime at about 12.5% may be called upon reduce its duty to the level of china at 6%, which may cause problems to the industry. Another concern was the growing India ?s trade deficit with China?from $ 506.74 million in 1994-95 to $ 1424.04 million in 2004-05, he said.