Support for commodity derivatives: R Ramaseshan

Finance minister P Chidambaram has taken a calibrated approach with respect to the commodity transaction tax by proposing a 0.01 per cent tax only on transactions in non-agricultural commodities. It will further strengthen the agricultural commodity derivatives market in India.

By reducing the securities transaction tax on equity futures from 0.017 to 0.01 per cent and bringing it at par with the rate on equity futures, he has also signalled a level-playing field. Earmarking Rs 9,000 crore as the first instalment of central sales tax compensation to different states/Union territories signals the government's commitment to bringing in the goods and services tax.

In a clear show of solidarity with the agricultural sector, the Budget promises a matching equity grant of Rs 50 crore for registered farmer producer organisations. This will help aggregate farmers and bring them to commodity exchanges. Additionally, a sum of Rs 5,000 crore to be made available to National Bank for Agriculture and Rural Development to finance construction of warehouses, godowns and cold storage units designed to store agricultural produce will provide much-needed boost to storage space. The Budget has come out strongly in support of the commodity derivatives market by deciding not to treat income from trading in commodity derivatives as speculative income and allowing offsets against loss from business income elsewhere.

R Ramaseshan

Managing Director, National Commodity and Derivatives Exchange