Gadkari accuses govt of ignoring manipulative futures trading

Bharatiya Janata Party (BJP) president Nitin Gadkari today alleged that soaring food inflation reflected manipulation in commodity exchanges and a failure of the government’s oversight over these exchanges.

While conceding that forward trading in many commodities had been banned, he said the past year’s record of trading in some commodities suggested transactions were 99 per cent speculation and less than 1 per cent delivery.

Gadkari said the ministries of agriculture, commerce, food and consumer affairs, and finance were responsible for the rising prices of commodities. He also demanded permanent de-listing of essential food/agriculture commodities from the forward trading list.

He said the prices of wheat, sugar, rice and dal had doubled in the past few months. That was wide variation between general inflation and food inflation — for instance, while general inflation grew from 1 per cent to 8 per cent, the food price index went up from 12 per cent to 20 per cent.

As a result, while consumers were paying three times more than the price paid to the farmers, the profits of commodity companies had gone up by 500 per cent to 2,900 per cent in the last quarter (October-December) of 2009.

Gadkari said while wheat production was up from 75.8 million tonnes (mt) in 2006-07 to 80.5 mt in 2008-09, the farmer got Rs 10 per kg, while the consumer was paying Rs 24 a kg. The BJP president said no forward trading was permitted in wheat till May 2009, when the ban on trading of wheat futures was lifted.

He claimed that between May and December 2009, of a turnover of 1.4 mt at the commodity exchanges, the actual delivery was just 1,400 tonnes. This suggested 99.99 per cent speculative trading during the period.

Wheat, however, has a weight of just 1.38 per cent in the Wholesale Price Index (WPI), diluting Gadkari’s argument that speculation in wheat had pushed the index up, leading to a rise on food inflation.

Gadkari said the government should take action not just against hoarders but also oversee the function of the commodities exchanges.