'Ban futures trade in essential commodities'

A working group on consumer affairs, led by Gujarat Chief Minister Narendra Modi, has recommended a ban on futures trading of essential commodities to combat rising food prices. This, along with 19 other recommendations, is part of a report submitted to Prime Minister Manmohan Singh on Wednesday.

The Modi Committee Report laid out 20 recommendations with 64 detailed actionable points for the government to combat inflation. The report has suggested setting up of a Price Stabilisation Fund by the central government to help the state government for procurement and distribution of essential commodities in short supply.

Other major recommendations made in the report included liberalisation of agriculture markets for improving the efficiency of distribution channel from farms to consumers, increasing participation of organised sector/cooperatives in retailing, including farmers’ markets, agro-processing, storage and cold chains for wastage control and reduction, proactive monetary policy, etc., an official statement said.

Modi, who chaired the committee, submitted the report to the PM at his residence in the presence of Union Finance Minister Pranab Mukherjee, Minister of State for Food, Public Distribution and Consumer Affairs, KV Thomas, and Minister of State in PMO, V Narayanasamy.

For evolving a single national agriculture market, the report has recommended to set up a ministerial level coordination mechanism at the national and the regional level for coordinated policy-making.

In its recommendations to the government, the committee has suggested that for the time being, essential commodities should be kept out of the futures market. In addition to this, the report also suggests expansion of priority sector lending upwards from the current level of 18 per cent.

Further, in order to minimise irregularities in the agriculture market, the committee has suggested establishment of a dedicated agency.

Since the government arm — Food Corporation of India (FCI) — plays a major role in procurement and distribution system of essential commodities, a suggestion has been made to explore unbundling of FCI operations in terms of procurement, storage and distribution functions.

The committee has called for a preparation of a 10-year perspective plan for improving agri-infrastructure of backward and forward linkages for agriculture production and marketing.

Moreover, the committee report also recommends to make punishment under section 10-A under the Essential Commodities Act more stricter by making it non-bailable and making a provision to assign such cases to special courts for speedy trial. The report also recommends that the period of preventive detention under the PBM Act (Black Marketing Act in common parlance) should be increased from six months to one year.