Another year of futures ban in seven agri-commodities likely

NCDEX, cabinet secretariat against extending the ban, but govt worried about possible price spikes

- Puja Das

 

Futures trading in seven agriculture commodities on the National Commodity & Derivatives Exchange (NCDEX) is likely to remain suspended until December next year, two government officials said, a move linked to the political inconvenience of rising food prices ahead of state and general elections.

The proposed extension for a year beyond 20 December comes in the face of opposition from the NCDEX and the cabinet secretariat.

The issue goes into the heart of a delicate matter of political economy— whether or not widely consumed agricultural commodities such as pulses and rice should be allowed to be traded on the exchange, given their likely impact on food security.

The prices of wheat, non-basmati rice and chana and moong, in particular, have been shooting up in the run-up to five assembly elections due later this year.

The finance ministry through the Securities and Exchange Board of India (Sebi) first imposed the ban in 2021, halting futures trading in seven commodities—non-basmati paddy, wheat, chana, mustard seeds and its derivatives, soybean and its derivatives, crude palm oil and moong (green gram)—for a year to combat rising inflation.

The ban was then extended for another year in 2022 despite protests by industry players and the exchange, which claimed it would hurt farmers.