The Hindu Business Line : Don't blame us for inflation: NCDEX

Chennai June 19 Commodity exchanges, or the futures trades that happen in them, are not to blame for the inflation. The rise in prices of agricultural commodities is a result of production shortfall and the exchanges merely reflect the reality, Mr P.H. Ravikumar, Managing Director & CEO, National Commodity & Derivative Exchange Ltd (NCDEX), said on Tuesday.

In a detailed presentation to the media here, Mr Ravikumar said on February 3, when the inflation was raging high, prompting the Finance Minister, Mr P. Chidambaram, to ban futures trades in wheat and rice, the year-on-year rise in prices of food articles was 12 per cent. Inflation in manufactured goods was 6.4 per cent. However, in the total index, food articles have a weight of 15.4 per cent, while that of manufactured goods is 63.8 per cent.

Even within food articles, foodgrains, with a weight of 5.01 per cent saw an inflation of 10 per cent. Mr Ravikumar said there had been a shortfall in foodgrain production over the last three years.

In comparison, the prices of non-exchange traded goods have also increased sharply, he said. For example, on February 3, the prices of groundnut oil, which had a weight of 0.17 per cent, was up 40.8 per cent, that of sunflower oil (weight 0.20) was up 54 per cent and tea (0.16) was up 23.4 per cent.

"We are not the Ministry of Agriculture. We do not plan production or supply seeds," Mr Ravikumar said, pointing out that the NCDEX neither bought or sold commodities.

"We are just the market place, we bring buyers and seller together," he said.

NCDEX is the second largest commodity exchange in the country (after MCX), with daily trading volumes of about Rs 3,500 crore. But it is the largest commodity exchange for agricultural produce — over 80 per cent of the goods traded on the exchange are agricultural produce.

Mr Ravikumar said if the NCDEX was always blamed for inflation, then it would have no option but to "move away" from agricultural commodities and focus on other items such as metals, steel and crude oils. If it does, all the farmers who are today benefiting from the good prices they get on NCDEX will lose, he said.

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