There is no evidence to show that futures trading in commodities results in a surge in the prices of those commodities, says Dr C. Rangarajan, Chairman, Economic Advisory Council to the Prime Minister.

In an address on ‘Some Perspectives on Growth and Inflation' at a seminar on the subject jointly organised by the RBI Staff College here and the Madras School of Economics, Dr Rangarajan observed, in response to a question, that among the commodities in which futures trading is permitted, the prices of some have gone up, while those of many others have not.

Even the Abhijit Sen Committee, which went into the question of whether or not futures trading in commodities, because of the speculation involved, leads to an increase in the prices of those commodities, in turn leading to inflation growth, was inconclusive.

The committee, Dr Rangarajan noted, did not conclude that the futures trading leads to price increase.

“My personal opinion is that futures trading does not contribute to price increase,” he said, adding that the final word on the subject will never be said as the question itself has been taken out of the realm of economics (and brought more under politics).

The question assumes relevance today as political parties (such as the DMK) have, in their election manifestos, said that they would oppose commodity derivatives.

Mr Prakash Karat of CPI (M) and Mr Tapas Sen, General Secretary, Centre of Indian Trade Unions (CITU), have always clamoured for ban on commodity derivatives, but more recently several non-Left political parties have also joined the call.

For instance, recently a ‘Chief Ministers' Working Group on Consumer Affairs', which was headed by the Gujarat Chief Minister, Mr Narendra Modi, and included the Chief Ministers of Andhra Pradesh and Tamil Nadu, recommended to the Prime Minister a complete ban on futures trading in essential commodities.

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