Cabinet defers Bills on FMC, SAIL public offer

The Union Cabinet on Thursday deferred a decision on two important and long-pending decisions — a Bill to give more powers to the Forward Markets Commission (FMC) and a follow-on public offer (FPO) for Steel Authority of India Ltd (SAIL) shares. The former move, to amend the Forward Contracts (Regulation) Act, 1952, empowering the commodities market regulator, was put off since the ruling coalition’s fractious constituent, the Trinamool Congress, wanted it. It had written to the Prime Minister last evening for the deferment.

TMC representative and cabinet minister Mukul Roy told Business Standard: “As I would not be able to make today’s meeting since I am in the northeast, I had requested that the FCRA Bill be not taken up today. I want to be present at the meeting to discuss our dissent to the Bill. Several other parties, too, have problems with the Bill.”

On Thursday’s cabinet meeting showed the TMC retains the weightage to stall decisions despite others being willing to proceed.

Discussion on the proposed FPO for SAIL, to raise much-needed revenue for the government, was postponed because the minister concerned, Beni Prasad Verma, was not present.

The amendments to the FCRA Bill are considered essential for development of the ommodities futures market. It aims, as mentioned earlier, to strengthen the FMC by providing it financial autonomy, facilitating the entry of institutional investors and introducing new products for trading, such as options and indices.

A standing committee of Parliament had examined the Bill and endorsed the argument for more autonomy to the FMC. The latter regulates the three online national commodity exchanges, the Multi Commodity Exchange, the National Commodity & Derivatives Exchange and the National Multi Commodity Exchange.

The MPs panel had also suggested allowing financial institutions and banks, mutual funds and insurance companies to participate in forward markets, to ensure better price discovery and lower volatility.

Food Minister K V Thomas said the Bill would be taken up later. He said all due consultations had been done and most recommendations of the parliamentary standing committee accepted.