New Delhi, May 9 (UNI) The industry today urged the government to lift the ban imposed on the commodities futures immediately, saying it will not help tame the surging inflation which has gone up to 7.61 per cent for the week ended April 26.
On the contrary, the ban will result into desperate off loading of stocks of potatoes, chana, rubber and soya.
''...as a result of ban on four commodities futures, the daily turnover of commodities exchanges could come down by a minimum of Rs 1,500 crore on which the contribution of chana would be the maximum followed by soya, rubber and potatoes,'' Assocham President Venugopal N Dhoot said in a note sent to the Finance Ministry.
He described the ban as totally uncalled for as also unfair as it is not going to serve the required purpose and on the contrary hurt sentiments of commodities exchanges and shrink their daily turnovers instead of getting them expanded.
Seeking withdrawal of the ban, he said it has been proved in the past that ban on futures trading of commodities such as wheat and pulses have not amounted to containment of inflation.
Likewise, the ban on futures trading of rubber, potatoes, soya and chana is unlikely to result into slimming of inflation and on will rather help traders and middlemen to make terms of money by manipulating market supplies to their benefits, Mr Dhoot added.
The chamber President said it will adversely affect the market sentiments as also interests of farmers, whose participation in the commodities futures has become so direct as they are in great hurry to off load their stocks and hence, amount to creating imbalances in the daily turnover of all commodities exchanges.
The ban has been imposed in an arbitrary manner without entering into the consultation processes by the authorities with concerned and relevant stakeholders and therefore, proved to be detrimental to economic interest of all involved in the supply chain management of commodities markets, he said.
The chamber has further pointed out that with this ban those involved in the commodities futures trade could also suffer severe financial crisis as most of them have incurred loans to pay for commodities not only from banks but also other financial institutions.
This will be so because it would be difficult for commodities traders to pay off the loans incurred at hefty rate of interest.
As per findings of Assocham, since the commodities market have been doing very well, it was earlier expected that these would grow at a sound double digit growth rate and touch market volumes to the extent of Rs 80,000 crore by 2010, but now it seems unlikely as the ban even if it may continue temporarily would substantially erode the projections.
Currently, there are about 50 commodities that are actively being traded in the commodities markets and the list would expand but if the ban is continued, the farmers would stop growing commodities and the list would shrink as farmers would be least interested in growing commodities that could be best traded in leading commodities exchanges such as MCX, NCDX, NMCE, NBOT and others.
The chamber has further pointed out that commodities exchanges should be smoothly allowed to work with FMC in order to make necessary measures to pay the way for a significant expansion and further development of commodities futures market.
UNI SBA PDT GC1908