No Drought-Like Situation, Says Sharad Yadav

India is no longer facing a drought-like situation after the recent rains, said Union minister for food and public distribution Sharad Yadav. He was speaking at a press conference at the second national conference on commodity exchanges.

"Though reports from the states facing a drought-like situation are yet to come, the preliminary assessment displays that the scenario is much better now. The crisis management committee, headed by Deputy Prime Minister L K Avani, is awaiting reports from the states on the status of rainfall," Yadav said.

"We have not yet estimated the damage but there will be no shortage of foodgrain." The rabi crop was expected to be normal, the minister added.

He also said the proposal to set up a national multi-commodity exchange was being discussed in detail. "Three to four parties have been shorlisted for the proposed exchange but a final decision is yet to be taken. Permission for the multi-commodity exchange will be given at the right time," said S Bandhyopadhyay, secretary department of consumer affairs.

The progress made by the exchanges that were given permission in the last two years had not been satisfactory and permissions to future exchanges would be given once the existing exchanges were functioning properly, Bandhyopadhyay added.

The department of consumer affairs had also proposed a second round of funding for the exchanges from the World Bank. The proposal was, however, turned down as the World Bank does not permit a second round of funding within three years.

However, the Planning Commission has allocated Rs 75 lakh in the Tenth Five-Year Plan for various activities to improve futures trading on commodity exchanges.

On the other hand, the Securities and Exchange Board of India (Sebi) has indicated that it might not be possible for mutual funds and foreign institutional investors to invest in commodity exchanges.

Sebi has asked mutual funds to make presentations so that the viability of such investments could be ascertained. Sebi has even constituted a committee to look into the viability of such investment propositions.