Agri futures trading, spot prices link unclear: Panel

However, the committee restricted itself to its terms of reference and did not take a stand on lifting or imposing a further ban on futures trading.

"I do not think one can conclusively say futures impacted prices," Abhijit Sen, a member of the Planning Commission and the head of the panel, told reporters after submitting the report to Consumer Affairs and Agriculture minister Sharad Pawar.

"The committee could not establish any causal or unambiguous link between futures trading of agricultural commodities and their spot prices. Separate notes have been attached to the report by all members including the chairman with individual observations on the issue," a member of the committee told Business Standard today.

The committee was set up on March 2, 2007 after an announcement by Finance Minister P Chidambaram in his budget speech.

It was asked to study whether futures trading affect spot prices of farm commodities and suggest ways to minimise its impact. The committee was also asked to recommend how farmers could get benefits of price discovery through commodity exchanges.

The committee, which met last week to sort out the differences among the members, decided not to take a view on the contentious issue of banning or not banning commodity futures trading in its "common minimum report". Last year, the government banned futures trading in urad and tur followed by rice and wheat.

Referring to the Sen Committee, Finance Minister P Chidambaram had recently said the government would take a decision only after the report was submitted.

Agriculture minister Sharad Pawar had asked the committee to submit its report within 10 days after which a decision on banning more agri futures would be taken. The Left parties have started pressuring the government to ban futures trading in view of spiralling prices.

However, Sen had said that the government did not ask it to dwell upon putting or lifting a ban on futures trading. "This committee is not in the business of recommending lifting or imposing a ban on futures trading. We are not giving any unanimous view on the subject," he had told reporters.

Apart from Sen, the committee includes Rajya Sabha member Sharad Joshi, Forward Market Commission member Kewal Ram, IIM Bangalore professor Prakash Apte and IIM Ahmedabad professor Sidharth Sinha.

Higher Volume
The value of more than 50 commodities traded on Indian exchanges, including the Multi Commodity Exchange of India, totaled Rs 40.7 trillion in the year ended March 31 2008 (financial year 2007-08), up 13 per cent from a year earlier.

The Forward Markets Commission, the commodities market regulator, expects turnover to reach Rs 50 trillion ($1.2 trillion) in the year to March.

A futures contract is an obligation to buy or sell a commodity at a set price for delivery by a specific date.

Domestic traders and producing and consuming companies are the main participants in India's commodity exchanges, compared with the 13 million individuals who invest in stocks.

Overseas funds aren't allowed to trade in India's commodity futures.