Lifting of ban on agri-futures hinges on crop prospects

The prospect of Kharif crop and price situation would drive the government's decision on lifting the ban on futures trading in a host of farm products when it comes up for review shortly.

The government had banned futures trading of potato, rubber, gram (chana) and soyaoil in May this year for four months and the period comes to an end on September 6.

These commodities were added to a list of four other products amid allegations from political parties that futures trading was leading to price rise. Futures trading on rice, wheat, tur and urad was prohibited in early 2007.

"We will review the ban on futures trading later this month. We would look into the crop prospects of Kharif season and also the likely price-trend over the next few months," a senior government official said, adding there is no proposal to ban any other commodity.

When asked about possibility of extending the ban on the four items beyond four months, Agriculture Minister Sharad Pawar had said in June in Rome "Let's see what happens...I think that the decision is taken only for four months. I do hope time will not come to extend the four months period".

Pawar had noted that in the Abhijit Sen Committee report members with an overwhelming majority said there was no proof that forward trading was responsible for the rising prices.

The committee, which was headed by Planning Commission Member Abhijit Sen, was formed last year to study the impact of futures trading on prices of essential commodities.

Analysts point out that since the Left parties, which were vocal against futures trading, are out of the ruling coalition, the government may not find difficulties in revoking the ban.