NCDEX writes to Rajasthan government on stock limit exemption

Draws attention on October '14 decision of Ministry of Consumer Affairs which exempts stock limit on regulated warehouses

To avoid seizure of depositors' goods stored in regulated godowns, National Commodity & Derivatives Exchange (NCDEX) has shot off a letter to the government of Rajasthan highlighting exemption of stock limit on WDRA (Warehousing Development and Regulatory Authority) registered warehouses.

The government of Rajasthan through a notification on June 22 levied stock limit on pulses under which no stockists should hold more than 250 tonnes. The government gave 15 days time to adhere to stock limit norms. The state government asserted that the stock limit will remain in force until September 30, 2015.

"We have reminded them (the government of Rajasthan) that the Ministry of Consumer Affairs has exempted stock limits on all WDRA accredited warehouses. We have written a letter to the Principal Secretary, government of Rajasthan, on Friday and awaiting reply," said Samir Shah, Managing Director, NCDEX.

The Ministry of Consumer Affairs had on October 14, 2014 given a conditional exempt on commodities kept in regulated warehouses (registered by the WDRA) from stock holding limits under the Essential Commodities Act. The government made mandatory for exempt warehouses to publish information on stocks available with them on real time basis.

But, the Rajasthan government's notification is silent on whether regulated warehouse are exempt from stock limit. Trade sources presume that all warehouse within the territory of Rajasthan would come under the stock limit and hence, they would require to bring down their stock limit on pulses to the specified limit of 250 tonnes.

According to trade sources, there are around 25 warehouses in Bikaner accredited by NCDEX of which around 15 are registered with WDRA. Registration of another around half a dozen is in various stages. These warehouses accumulatively possess over 140,000 tonnes of chana as of now.

"They are NCDEX warehouses. They are members of exchanges. We have told them in fullest trust for stocks to be for the purpose of price discovery. If we cannot assure them that their stock is safe, and not get seized then we are not doing our job. The stocks under NCDEX warehouses are used for price discovery. So, stock is the critical element of price discovery. If they get seized then it would be very easy for speculators to drive prices," Shah added.

Meanwhile, a district supply officer of a major centre indicated actions after scheduled deadline gets over i.e. after July 7.

"We have taken the first step by writing to the government of Rajasthan. On not getting response, we will go to the Ministry of Consumer Affairs and ask them to direct the government of Rajasthan accordingly," he said.