No plans to ban futures in more commodities: Finmin

The government said on Tuesday it has no proposal to ban futures trading in more commodities.

"Since the Abhijit Sen Committee could not establish any definite causal relationship between futures trading and rise in prices of commodities, there is no proposal to ban futures trading in more commodities," minister of state for finance P K Bansal said in a written reply in the Rajya Sabha.

On whether the futures trading policy of the government has resulted in the extremely high inflation (as seen some months ago), he said the committee to study the impact of futures trading on the prices of agricultural commodities could not draw any strong conclusion.

The latest inflation rate as on December 6, measured by the wholesale price index, stood at 6.84 per cent. The rate of inflation had touched a high of 12.91 per cent on August 2.

"The expert committee . . . has stated that in view of conflicting results from daily, as against weekly and monthly data, no strong conclusion can be drawn on whether (the) introduction of futures trade is associated with decrease or increase in spot price volatility," Bansal said.

It may be noted that the government through the Forward Markets Commission had suspended futures trading in tur, urad, wheat and rice in 2007.

Subsequently, the FMC had suspended futures trading in chana, soy oil, potato and rubber from May 7, 2008.

However, the ban on these four items was not extended beyond November 30.

Replying to a related query, Bansal also said that futures trading in commodities in India does not appear to lead to any flight of the Indian currency abroad.