Govt Seeks $ 0.5m Wb Aid To Upgrade Commodity Exchange

The government is likely to seek a $ 0.5 million aid from the World Bank to upgrade market infrastructure for facilitating derivatives trading in all commodity exchanges.

The grant will be used for implementing online trading, computerisation and stepping up awareness building programmes among commodity traders.

"In order to facilitate the commodity exchanges in implementing reforms and increase trade volumes, the government is moving another proposal for seeking external grant assistance, similar to the International Development Fund (IDF) project successfully implemented with the assistance of World Bank," consumer affairs and public distribution minister Shanta Kumar said in a speech at the National Conference of Commodity Exchanges which was read in his absence.

India had obtained a $ 0.49 million loan from the Bank, earlier.

Kumar said the government has made efforts to use the earlier grant for capacity building of exchanges and forward market commission (FMC).

The consumer affairs ministry has also sought finance ministry's intervention for favourable amendment to the Income Tax Act to facilitate derivative trades in commodities, the minister said.

As part of commodities market reforms, certain amendments to the Forward Contract Regulation Act have been proposed to remove ban on options trading in commodities and strengthen the FMC.

The total volumes of trading as a percentage of total production of the commodity, an indicator of the liquidity of the exchanges, varies between less than one per cent of total production to as high as about 300 per cent of production in certain years (potato in Hapur and pepper in Kochi), consumers affairs secretary S Bandhopadhyay said, adding however,