No complaint about Futures market manipulation:Govt.

Kochi, Oct 6 (UNI) Refuting the Left parties' charge that futures trading in agricultural commodities has led to a hike in the prices of essential commodities, union Consumer Affairs Secretary L Mansingh has said no specific instance of cartel-formation or market manipulation has come to the government's notice.

Addressing a press conference here last night, Mr Mansingh said the Forwards Market Commission (FMC) was keeping a close watch on the situation.

No specific complaint had been made either to the commodities exchange authorities or to the government about market or price manipulation. Only some general complaints had come from traders but these were not substantiated, he said.

Stating that all commodities exchanges were state-of-the-art, Mr Mansingh said the transactions were monitored on-line by the FMC.

The Commission was in the process of getting a special computer software to alert the regulator about any manipulation, he added.

''Our experience has been that forwards trading has brought down volatility of prices and kept the market stable,'' he added.

Referring to the recent increase in the prices of wheat, sugar and pulses such as 'urad', 'moong' and 'channa', Mr Mansingh said that an analysis had shown that the price rise was caused by other reasons.

While in the case of wheat it was because market arrivals were much less in this season, the increase in pulses was due to Pakistan entering the market as a buyer at the same time as India, to purchase pulses from Myanmar, which is the main source of pulses for India.

''In fact, no 'channa' is available either in the international or domestic market and some private traders are importing yellow beans from Canada and Australia,'' he added.

Flooding in Maharashtra and less rainfall in Karnataka had led to lesser quantities of 'urad' coming into the market. However, with reports of good sowing coming in, the prices of 'urad' and 'moong' were expected to come down, he added.

Asked whether farmers had gained from forwards trading, Mr Mansingh said the farmers in major agricultural states such as Haryana and Punjab had no complaints. However, he agreed that on the ground level, it were only farmers in Kerala who were directly participating in forwards trading.

To encourage more farmers to come into futures trading, the government was examining a Mexican model, where banks acted as ''market aggregators'' to bring together farmers to trade, he said.

The commodities exchanges also had been asked to conduct studies to assess how far the farmers had benefitted and their reports were awaited.

Mr Mansingh said the RBI had set up special groups to study the demand that mutual funds and banks be allowed to participate in futures market. ''The RBI is looking into the question of necessary safeguards before this is allowed,'' he said.

About the amendments to the FMC Act, 1952, to empower the Forwards Market Commission to act as an independent regulator like SEBI, the Secretary said that depositions were going on before a Parliamentary Standing Committee about the proposed amendments.

Mr Mansingh said that as of now forwards trading was allowed in 102 commodities. There were three national and 21 regional exchanges.

Almost 98 per cent of the business was done at the three national exchanges, which had registered an annual turnover of Rs 11 lakh crore during 2005-06. This was an over 200 per cent growth over the turnover registered during the previous year.

Agreeing that regional exchanges, which were commodity-specific, were not being able to compete, Mr Mansingh said the government had examined the issue and had laid down guidelines for them to adopt practices to make their trading more transparent.

Mr Mansingh was here yesterday to attend the seventh trade and settlement committee meeting of the National Multi-Commodity Exchange of India (NMCE). The NMCE Managing Director Kailash Gupta was also present.

UNI ARC DK1543