Union agriculture and consumer affairs minister Sharad Pawar said in Parliament that futures markets only provided a platform for price discovery and were not per se responsible for any rise or fall in the price of any commodity. He also added that the ban on futures trading had not harmed the countrys agriculture growth. The government had banned futures trading in wheat, rice, tur and urad in 2007 after the then Left allies blamed malpractices in the futures market as being responsible for the hike in the open market prices of these commodities.
A government-appointed committee under Planning Commission member Abhijit Sen and other independent studies have established that price movements in the spot market have no clear and definite link with the futures markets. In May, the government also suspended futures in refined soyoil, chana (chickpeas), rubber and potato after their prices soared in the local markets. In December, the more-than six-month-long ban on futures was allowed to lapse, paving the way for resumption of futures in the four suspended commodities.
The ban on futures trading in soya oil, potato, chana and rubber has not caused heavy losses to farmers, Pawar said. Pawar also said that any comprehensive study to assess the impact of agri-futures ban on the countrys agricultural growth could not made as the FMC informed that the period of active futures trading prior to the imposition of the ban on eight items was not long enough to provide adequate data for an analysis.
India is all set to clock a robust agriculture growth of around 4% in the fiscal of 2008-09 because of a sharp increase in foodgrains and oilseeds outoput. The foodgrains output in 2007-08 (July-June) is estimated to be a record of 231 million tonne, up from 219 million tonne seen last year.