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“Do we need commodity futures?” ( Business Line , March 30) was a thought-provoking article that highlighted the futile exercise of having a futures market in a country like India which is characterised by shortages and mismatches observed between demand and supply of essential commodities traded, such as food-grains, energy and base metals.
In an environment of price increases and high ‘volatility', we cannot afford to ape the West and bet on futures markets.
The futures market in India has been a healthy breeding ground for speculators to thrive on artificial upward price movements and, at the end of the day, neither the producer nor the consumer stands to benefit.
As it is said, the world over, in the futures markets, only 2-3 per cent of trades fructify into actual delivery and payments. Invariably, it is a ‘knock-off' or ‘square-off' deal for the speculators that ends in a thumping net profit or loss with no productive realisation from the transactions in the form of physical delivery.
Ashok Jayaram
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