The Hindu Business Line : Commodity futures turnover to zoom

Mr L. Mansingh, Secretary, Consumer Affairs, addressing a seminar on `Commodity futures' along wih Mr P.M. Sinha, Chairman, Agriculture & Rural Development Committee, in the Capital on Saturday. — Kamal Narang

New Delhi , July 17

THE turnover of the commodity futures market will overtake capital market turnover in the near future, Mr Lalit Mansingh, Secretary, Department of Consumer Affairs, said here today.

While addressing a seminar on Commodity Futures, organised jointly by FICCI and the National Commodity & Derivatives Exchange Ltd (NCDEX), he said the total turnover of the commodity futures market in the country has already reached the level of Rs 1,30,000 crore by March 31, 2004.

He further felt that the basic infrastructure of the commodities market needed to be improved. Mr Mansingh pointed out that the enactment of the Forward Contracts Regulations Act (FCR Act) and the removal of restrictions on the regional commodity exchanges, which are functioning in a fragmented and disorganised way, are important to achieve greater volumes in trading.

Easing ofcurrent restrictions on the movement of commodities also has to be taken up. Today, due to these movement restrictions, farmers are unable to get optimum prices for their products and the middlemen corner most of the gains, he added.

The weakness of the commodity futures market in the country impacts farmers' income and interests. For instance, though India is the largest producer of castor seeds accounting for 70 per cent of the global production, the country has an insignificant role in determining prices.

These are decided in the futures market at Rotterdam. Similarly in the case of gold, where India is the largest consumer, the ability to influence global prices is very limited due to lack of efficient market mechanisms.

It is time to think why India should not take a more effective role in pricing of those commodity markets where it has a dominant role either in production or consumption, Mr Mansingh said.

In his presentation, Mr P.H. Ravikumar, Managing Director, NCDEX, highlighted the existing structure of the commodity market.