Ban Futures Trading in Essential Commodities: Modi-Headed Panel

Group suggests price stabilisation funds to fight inflation, ministerial-level co-ordination mechanism

A Working Group on Consumer Affairs headed by Gujarat Chief Minister Narendra Modi has recommended setting up of a price stabilisation fund and a ban on futures trading in essential commodities to fight food inflation. It also suggested a ministeriallevel co-ordination mechanism at the national and regional levels for policy formulation to evolve a single national agriculture market.
The group, which submitted its report to PM Manmohan Singh on Wednesday, gave 20 suggestions with 64 actionable points. The committee, with CMs of Tamil Nadu, Andhra Pradesh and Maharashtra as other members, was of the view that a price stabilisation fund set up by the Centre will help states in procurement and distribution of essential commodities in short supply.
On future trading, the group concluded that considering absence of strong linkages between spot and future markets, essential commodities should be kept out of the future market.
However, the government has been maintaining that there was no proposal to ban futures trading in essential commodities on the ground that no study has identified it as one of the reasons for increase in food prices.
Formed by the Prime Minister in April, 2010, in the face of soaring food inflation, the group also suggested liberalisation of agricultural markets to improve distribution from farms to consumer, increasing participation of organised sector and co-operatives in retailing to promote competition and priority lending to agri-market activities. It also recommended focusing on time-bound development of agri-marketing infrastructure including storage capacities in food deficit regions, cold chain and agro-processing besides unbundling of Food Corporation of India operations of procurement, storage and distribution. The group has recommended enlarging the scope of priority sector lending such that the agriculture marketing activities are made eligible and raising the ratio of priority sector lending to the agriculture sector further from the current level of 18%.
To minimise information "asymmetry" in the agri market, the report called for establishing a mechanism to collect and disseminate information to all stakeholders on production, import, stocks and overall availability of essential commodities besides extensive use of the Information Technology. This could be done by setting up a dedicated agency for it. It suggested preparation of a 10-year Perspective Plan for improving agri-infrastructure.

FIGHTING PRICE RISE: Modi (R) submitting report to PM Singh